Covid-19 impact: the aviation sector will shrink considerably, recovery will be slow

MUMBAI: Of the 650 aircraft currently in India's carrier fleet, around 200-250 aircraft may end up in surplus over the next 6-12 months as they are likely to be significantly reduced, according to the latest report. from the Asia Pacific Aviation Center (CAPA) India, a global aviation consultancy.

After closing, recovery is likely to be slow, demand to be suppressed due to economic dislocation, slow or even negative growth in GDP (broken domestic product), broken supply chains, low consumer confidence and concerns on persistent COVID-19 outbreaks, especially if travel insurance companies refuse to provide coverage for associated medical expenses or trip interruption costs, the CAPA report said.

When services resume, airlines will need to publish a timeline, which will require decision-making regarding which routes to launch first and with what level of capacity, not knowing until much closer to the departure date whether the demand actually exists.

Some carriers may decide to operate only a skeletal network, on the grounds that it may be better to keep the planes on the ground to save cash, until there is more clarity on how travel demand is picking up, CAPA said.

Then there would be passenger concerns or even regulatory provisions related to social distancing at the airport and on board, longer response times to allow a thorough cleaning of the cabin after each flight, limitations on board service, airport health checks , as well as changes in security controls and immigration procedures. , which can lengthen the processing time.

In addition to rising costs, the impact on the passenger experience may deter some travelers, according to the report.

It would take up to a year for India to return to an operational fleet of 650 pre-COVID aircraft from the time restrictions are lifted, he said. The report estimates that Indian carriers will require a national fleet of around 300-325 aircraft from October 2020 onwards, and an international fleet of 100-125 aircraft.

The total fleet size of 400-450 aircraft would still mean that the current fleet of 650 represents a surplus of 200-250 aircraft over a period of 6-12 months, the report said, noting that projections assume travel restrictions would be mostly up at the end of the first trimester.

Projections are further complicated by the fact that restrictions are unlikely to be lifted in their entirety overnight. Instead, this process is expected to occur in a phased manner and not follow a straight line, particularly when it comes to international travel. For example, China, Hong Kong and Singapore have re-imposed certain travel restrictions after an initial relaxation resulted in an acceleration of new cases, imported mainly by foreign arrivals, he said.

International travel will be even more complex because a coordinated lifting of restrictions is highly unlikely. Instead, passengers are likely to face continually changing regulations on entry and transit conditions for passengers, depending on their nationality and recent travel history, often introduced without notice in response to new local COVID outbreaks. -19, the report said.

The implementation of travel bans in recent weeks are decisions that most governments would have deliberated, given the unprecedented nature of such actions. But now that travel bans have been accepted globally as a legitimate response to a health pandemic, they are likely to be reintroduced without hesitation should they be requested in the future, he said.

In contrast, with the overnight suspension of all flights, the resumption of operations is much more complex, as the industry will likely have to restart in an environment where there will be limited visibility into demand prospects.

This is especially true in a market like India, which has a very late booking profile. In addition, advance bookings for domestic travel in May, June, and July are currently down 80% yoy and will remain significantly limited for at least the next 4-6 weeks. This will further affect the most vulnerable carriers who depend on cash generated from advance sales, the report said.

The combination of COVID-related travel restrictions and an economic downturn is likely to cause the first quarter of fiscal year 2011 to be a virtual disaster for Indian industry. The second quarter is historically the weakest period for demand, and therefore airlines are likely to rebound again. As a result, the majority of the fleet is likely to exceed requirements during the first half of the financial year.