Covid-19 Outbreak Hits Aviation Sector; Indigo Grounds 16 Planes, Cuts Salaries Of Senior Employees

"The load factors have gone down substantially on the domestic flights. The domestic flights are flying almost half empty, and the passengers on international flights are even lower," says an IndiGo official on condition of anonymity.

Till March 6, IndiGo had cancelled 42 weekly flights to destinations such as Singapore, Bangkok, Guangzhou, Chengdu, and Hong Kong. (File Photo/ AFP)

New Delhi: The rapid and alarming onslaught of the Coronavirus pandemic which has already begun to show detrimental effects on the global economy is projected to have an adverse effect on the aviation sector. The India aviation industry is no longer alienated to the Covid-19 menace as India's largest carrier IndiGo has grounded about 16 planes out of its 260-aircraft fleet, said an IndiGo source on condition of anonymity. IndiGo CEO Ronojoy Dutta on Thursday announced that the airline was instituting pay cuts for senior employees and he would himself take the highest cut of 25 per cent on account of the novel Coronavirus epidemic that has dealt a serious blow to the aviation industry. "With the precipitous drop in revenues, the very survival of the airline industry is now at stake," Dutta said in his email to employees. "We have to pay careful attention to our cash flow so that we do not run out of cash." "With a great deal of reluctance and a deep sense of regret, we are therefore instituting pay cuts for all employees, excluding Bands A and B, starting April 1, 2020," the chief executive officer said. "The load factors have gone down substantially on the domestic flights. The domestic flights are flying almost half empty, and the passengers on international flights are even lower," says an IndiGo official on condition of anonymity. Owing to the travel restrictions imposed by the govt in wake of the Coronavirus outbreak, IndiGo cancelled its Delhi-Istanbul and Chennai-Kuala Lumpur from March 18, 2020 until March 31, 2020. The airline has already cancelled flights between Bangalore-Kuala Lumpur until March 31, 2020 and Delhi-Kuala Lumpur until April 30, 2020. Till March 6, IndiGo had cancelled 42 weekly flights to destinations such as Singapore, Bangkok, Guangzhou, Chengdu, and Hong Kong. Additionally, the LCC (low-cost carrier) has announced cancellation of flights between Mumbai-Jeddah and Bangalore-Jeddah from March 29, 2020 until April 14, 2020, and Chennai-Calicut and Calicut-Jeddah flights from March 29, 2020 until April 24, 2020. On March 11, IndiGo informed stock exchanges that it has been impacted by Coronavirus. "In January and February 2020, IndiGo experienced modest impact from the Coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to certain other South-east Asia markets...over the past few days however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings. Please note that the numbers could change from here based on how the situation evolves." Till last week, major domestic airlines like IndiGo, Air India and SpiceJet had to bear the brunt to their operations on the international side but as the Coronavirus scare looms large over the domestic market, large-scale cancellation and rescheduling are beginning to happen even among Indian passengers. The low passenger demand has forced airlines to now re-strategise their flight schedules in the domestic market as well. Though IndiGo has thus far not announced any changes in its domestic flight schedule. According to aviation consultancy firm CAPA, Indian carrier may initially ground around 150 aircraft, and the number is expected to grow as more domestic operations are curtailed over the coming weeks. "If the decline in traffic continues to be severe, the majority of the fleet could be grounded by April. By extension, the reduced scale of operations could impact the requirement for around 30 per cent of airline staff and up to 50 per cent of ground handing staff... For the first couple of months this could potentially be handled through mandatory leave and leave-without-pay initiatives for 1-2 months... At an industry level, consolidated losses are estimated to be in the range of $500-600 million for the quarter (excluding Air India)," a recent CAPA report said. Some reports suggest the ruling BJP government of Prime Minister Narendra Modi is mulling over $1.6 billion rescue package for the aviation industry, which has been one of the worst affected sectors due to Coronavirus.