THE ‘CORONA’ KNOCKOUT FOR INDIAN AVIATION

Indian Aviation was touted to be growing so fast that the world was waiting to get into India and were held back at the door steps because of the government policies as well as the great regulator called the “DGCA”. However, even before the virus hit, Indian Aviation was clearly in need of some kind of consolidation. Jet going bust gave some breathing space for the rest of the players, but most of them were bleeding. No one wanted to cede the space, it was all about who blinked first. After Jet, it was Air India’s next, but then the Government’s did something so lucrative. Cleaned up Air India made it extremely lucrative and put it up for sale. The only non-lucrative part was the heavy baggage of employees, but still people were interested and then came the knockout punch called the Corona Virus or now the infamous COVID 19.

The Virus not just hit Indian Aviation, but Aviation worldwide….and actually not just aviation but the economy in total. Unlike 9/11, it was not a shock just to aviation to let it recover, here the shock is to the economy and that makes this recovery even more painful and for some it’s a deathblow. The government’s plan of the ‘hawai chappal’ flyer wasn’t a great success, it was bleeding everyone and yet the government held on with some budgeted money. Now, the problem is suddenly bigger….if the Aviation sector need to get back, the government has to not bring the ‘hawai chappal’ guy, but the ‘suit-boot’ guy back to flying and that is quite a task.

Adversities teaches you. It has taught corporates how you can avoid travel and still get work done through video conferences. It has taught lawyers and judges to use video conferencing for court proceedings. With the scare of the virus, the mutant strain possibilities, the vaccination is a good 2-3 years far and this means that the ‘suit boot’ man is not going to fly at the drop of a hat as he is used to. With severe restriction on seating and social distancing, if the airlines choose to raise the ticket prices, the cost sensitive Indian is going to bid a good bye to flying. ‘Family flying’ for vacations / holidays is not going to happen. With the blow to the economy, the common man is not going to have funds to fly and this means for the next 2 years the maximum flying will be done by the ‘suit boot’ guy and the government servants which in no way will get the aircrafts full.

The governments worldwide are trying stimulus package to Aviation Sector. Will the Government of India too give a stimulus package? When it comes to India, we have our own set of problems. The first for the Government is what is it going to do with the money guzzler “Air India”. No player is going to run in now to buy Air India and particularly with its heavy baggage of employees. Not now, not for atleast the next 2 years. Will the government fund Air India for next two years?  Can the Government extend any kind of package without letting Air India survive? There will be public back lash and corruption allegations if the government decides not to revive Air India but give a stimulus to the Indian Aviation Industry. So, if at all there is a stimulus, it could be low interest loans which will have to be extended to Air India as well!!!

Assuming, Banks give working capital loans to Airlines, how long will they be able to survive and service the loans too in the present scenario? No banker should even think he would get a single rupee even for the first 2 years. In such a situation, who will want to extend their head for chopping to the Aviation Industry?

Now, lets see the players in the Indian Aviation Sector.

Indigo certainly is sitting pretty among the rest. But it is akin to having a one-eyed king in the land of blinds. Indigo also have the largest fleet (of about 250 aircrafts) and more aircrafts on its way (about 600). Indigo has to now decide what to do of its order books without litigation, cut its present fleet to atleast half (because its not just about the costs of the aircraft but each aircraft has atleast 2 sets of crew attached to it) and all these cost overheads has to be drastically reduced.

Vistara for the time being looks better off than Indigo. It has a fleet of just about 50 aircrafts and an order book of another about 50 aircrafts. It has TATA and Singapore Airlines to back up. TATA has considerable businesses and the time may be ripe enough to get the entire TATA group and all other corporate extensions to fly Vistara.

Air India. The less said the better. It is completely dependant on the benevolence of the government of India. But without saving Air India, it is unlikely that the Government of India can have a moral ground to save other players in Aviation Sector. I have always been maintaining that ‘government doing business’ is always a threat to fair Competition. In EU, Government Funding is highly scrutinised by the Anti Trust Regulator. In India, there is a standing Order which bars government employees (except Judges) from flying any other carrier other than Air India in sectors where Air India flies. I had challenged this in the Competition commission which failed to understand the ‘issue’ at all and now another matter on the same issue is pending in the High Court of Kerala.

SpiceJet is one company that came back from death bed. This time its doubtful how it can survive. It has strong backing from political bosses, but this time it is doubtful if it can be saved by even its connections. Its hard cash that is needed and nothing else can save it. Where it will come from, God alone knows. But ‘miracle’ has been a part of ‘Spice Jet’. Nothing else explains its survival. But may be there is a streak of luck shining again, but it is negligible. Spicejet has about 100 aircrafts including cargo aircrafts operating minus its MAX fleet. Its order books have about 200 MAX aircrafts and they are eligible to get compensation from Boeing. But now with no one anywhere in the world requiring aircrafts atleast for the next 3 years, it is doubtful if Boeing itself would survive to pay compensation even if it has other businesses. Spice has already been sued in the UK for not taking deliveries. So even if ‘miracles’ do work, for the ‘miracles’ to work consistently for 24 months is a difficult ask.

Go Air is lean with just about 50 aircrafts and about 100 on order, but unfortunately its account books are even leaner and its time to choose between biscuits and flying. Aviation can be a business that can pull you down just the way it pulled the now infamous Vijay Mallya. It can finish off all your businesses how much ever ‘circuit breakers’ have been kept between businesses.

Air Asia. The Government of Malaysia is already thinking of merging Air Asia and Malaysia Airlines and this means, we may not see this carrier longer and this might help TATA’s too with their investment buried in there.

In the story of this knock out, the actual knockout is not of these companies, but of their employees and most importantly the Crew, the Engineers, etc. it is going to be the most dreadful time for both the cabin crew and the cockpit crew. In the current scenario, the employees will not even have a say in anything. They would be worse than ‘bonded labourers’ (in any case they were, with pilots moving around with bonds) pulled to exhaustion. Recently, because of the Delhi High Court order, the DGCA came out with a new FDTL regulation that was even worse than the one it replaced. The pilots were pushed to the brim, yet with the bonds they could only crib and do nothing else. Now, I guess the time ahead is going to be so bad that they cannot even have the freedom to ‘crib’. If at all, they can crib in the comforts of their washrooms.

As for me, after the lockdown, I doubt if I would be in any hurry to take a flight. Courts have moved to video conference mode and other than the fear of COVID 19 in the horizon, the larger fear would be about ‘Aviation Safety’. Every airline has started advertising as to how safe the passengers are in their aircrafts but for the ones who have their eyes on ‘aviation safety’, all corners are cut in spaces that cannot be seen by the passengers and that is in ‘maintenance’ and optimal utilisation of crew, both cabin and cockpit. I may be willing to take a chance with Covid 19, but never with a fatigued pilots and cabin crew. The last few flights I took before the lockdown, I was normally flying the last sector of over stretched crew members and this is certainly going to get worse.

If any airline thought that it could get back its passengers by advertising the steps they are taking to fight Covid 19, they need to remember the millions who have been denied ‘refunds’. The refusal to give ‘refunds’ clearly point out what airlines think of their passengers. They think that these are passengers who are not loyal to them but choose the ‘cheapest available tickets’ and by this assumption, it is not required to gain confidence of these passengers who would continue to fly the cheapest available flight. I can tell one thing for sure, not many passengers are going to book too soon and not many will forget too soon the conduct of the airline carriers.

And when all governments are busy finding ways to revive or give stimulus, our part time minister is busy tweeting how many tons of cargos are being carried by our airlines. These airlines are not even aware as to when and how the government is going to ease restrictions. I have no doubts that this is a knockout punch given by Covid 19 to some of the Aviation players in India, who all will survive and who all will come out of the ventilator is to be seen but one thing is for sure, whoever manages to survive will be in a position to enjoy the ‘bounty’ India would offer 3-5 years down the line……

For the cabin crew, the cockpit crew, the engineers……its time to work with head down and mouths shut. You are barred even from cribbing in public. Whatever has to happen will happen. There is nothing out there that will let you enjoy your passion, you are there for a JOB and just do that…….