Impact Of Aviation Crisis On Indian Economy

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The Aviation sector contributes significantly to the Indian economy. It provides the only worldwide rapid transportation network, which makes it essential for global business. It generates economic growth, crates jobs and facilitates international trade and tourism.    

This industry including Airline and its supply chain, is estimated to contribute directly or indirectly of 72 Billion Dollars of GDP to India. 

Aviation is among the worst effected sectors amidst the COVID 19 crisis that has taken the scale of a pandemic. In India, 29.32 lacs jobs in the Aviation sector are at risk. Airlines in the Asia-Pacific region may see the largest revenue drop and Indian aviation sector, among the Asia -Pacific countries will be worst hit by COVID 19 crisis.  Further, the periodic shutdown has eroded the capital of most airlines. The cost of maintaining aircraft on ground is extremely high, and with nil revenues, this is a sure-shot recipe of disaster.

Airlines in India are vulnerable to high operating leverage which signifies an ability to use its fixed operating expenses to magnify the impact of change in its sales on its operating profit. In the background of severe downturn expected in the Industry, the highly levered airlines in India are likely to suffer heavy losses.    

Further, following facts has further aggravated the crisis - 

1. Forty percent of fleet is grounded.

2. Due to social distancing and other hygiene protocols an aircraft can fly for eight hours because of the elongated (angular distance in the sky between a celestial body and a path where it intersects the horizon) turnaround time. 

3. One third seats are to be kept vacant.

4. Break - even ticket price in such case would be astronomical. 

5. Finally, flying at a reduced 50% PLF (ratio of average power generated). 

Recovery from this crisis is going to be a long and uphill task. It will take effort, planning and coordination between the aviation industry and the Government.  



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