The global aviation industry has been severely affected by the outbreak of coronavirus disease (Covid-19) which resulted in closing the overseas operations and grounded the carrier fleet of almost all airlines across the globe. The rapid decline in demand for air travel, due to the government’s restrictions, caused a traumatic experience for the airlines and some of them have declared to cease their operations due to bankruptcies.
Amid the further escalation of the virus cases in the country, the Indian government is planning a rescue package worth about $1.6 billion for the aviation industry in a bid to avoid bankruptcies of its air carrier companies.
Acknowledging the grave impact on the global aviation industry by the virus outbreak, the International Air Transport Association (IATA) had earlier appealed and urged the government of all countries to come in for the rescue of their airline companies. With several airlines forced to ground their fleet and cut down jobs and staff, the IATA estimated that the total loss of the aviation industry globally would be more than $200 billion.
As several governments have geared up to proceed with their rescue plan, the Indian government was reported to deploy its rescue package. For instance, the Trump administration, earlier on Wednesday, introduced a $50 billion rescue loan package for US airlines and sought approval from Congress.
Two government sources told Reuters that India convened its rescue plan, as proposed by India’s civil aviation ministry, worth nearly $1.6 billion for the aviation sector as the virus outbreak had forced to close the air operations and ground the fleet.
The sources added that the Indian Finance Ministry was also considering a proposal to temporarily suspend most taxes levied on the aviation companies, including a deferment of aviation fuel tax. One of the sources explained, “Taxes could be deferred till the coronavirus spread is contained and the aviation sector can come back to its feet,” adding that the companies could be permitted to pay the taxes interest-free in the next tax cycle.
The coronavirus outbreak has infected over 200,000 people and expanded over 164 countries which had claimed about 8,500 deaths worldwide. Gradually, the virus spread has continued in many Indian states having more than 150 people infected cases with three death. The rescue package for the aviation sector as part of the government’s attempts to address the financial impact during the health crisis.
Several companies including Vistara, a joint venture of Singapore Airlines and India’s Tata Group, and budget carrier GoAir have suspended their international operations. Recently, IndiGo, India’s biggest carrier, has also canceled some of its overseas operations and is likely to put halt its domestic air travel due to the decline of consumers.
Global aviation consultancy, CAPA’s India unit, however, most airlines would continue to shrink their services and some of them are still vulnerable to nearly shutting all operations besides the government’s fiscal help and concessions. CAPA estimated that Indian airlines, excluding state-backed carrier Air India, have incurred a loss of up to $600 million for the January-March quarter.
CAPA stated in March 18 report, “In the absence of serious and meaningful government intervention, such an outcome could lead to several Indian airlines shutting down operations by May or June due to a lack of cash.”
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