TLI Staff
New Delhi: With Coronavirus outbreak dealing body blow to airlines, the industry has asked the government for a bail-out package which includes deferred bank loan repayment, slashing state VAT on jetfuel to 4 per cent and lowering of airport charges.
The airlines have together submitted a rescue plan to the nodal Civil Aviation Ministry following a joint meeting last week.
Two top airline sources said that industry was staring at massive loss as passenger demands and yields were fast collapsing due to travel advisories issued by the government, suspension of visa and order to suspend flights to countries in Europe and Middle East.
“While international flights have been curtailed to the extent of 80 per cent, frequency on many domestic routes has also been reduced to lower passenger load. The flight occupancy on domestic routes has come down to 60-65 per cent on an average. We may not survive in absence of government support,” said an airline executive.
In a report on impact of Coronavirus on airlines, Sydney-based Centre for Asia Pacific Aviation (CAPA) has said that most airlines in the world will go bankrupt by May-end if the virus outbreak is not effectively controlled and government extends support.
Facing existential crisis as Corona continues to play havoc, American airlines have sought a $50 billion bailout package from the government. Airlines for America which represents top carriers including American Airlines, United Airline, Delta Air Lines, Southwest Airlines has said that the industry needs $25 billion each in grants and bank loans over and above major tax concessions.
Being in the frontline of the sectors taking major hit by the deadly Coronavirus, most global airlines including Lufthansa, Singapore Airlines and Emirates have grounded large chunk of their fleet. Given that the virus continues to spread, they are facing most uncertain times in recent past.
“We have lost a large amount of our traffic in a very short time, and it will not be viable for us to maintain our current network. Make no mistake — we expect the pace of this deterioration to accelerate. The SIA Group must be prepared for a prolonged period of difficulty,” Singapore Airlines CEO Goh Choon Phong said on Tuesday.
In a statement to the stock market this week, EasyJet quite well summarised the current challenges facing European carriers.
“European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery. Whether it does or not will depend significantly on European airlines maintaining access to liquidity, including that enabled by governments across Europe,” it said.
A senior Air India executive said that each day the level of panic around Coronavirus was growing pushing the airlines to corner.
“We can’t even make an estimate of loss as each day things are evolving. The losses are mounting on hourly basis and survival becoming a challenge,” the official said.
He noted that fuel prices had plummeted but in absence of passenger demand the lower input costs means nothing.
Official sources told Top Lead India that domestic carriers want deferred payment for fuels and airport fees. The airlines have suggested 25-30 per cent cut in landing and parking fees charged by the airport operators to cope up with crisis. The industry has suggested that aviation turbine fuel (ATF) or jetfuel could be brought under GST in case states do not agree to lower VAT.
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