Hard Landing For SpiceJet
Due to lockdown, airlines are facing a huge slump in demand and most of the fleet of planes are grounded. As revenues have stopped, airlines across the world are on the verge of bankruptcy. India’s SpiceJet is one such airline and is now looking for a buyout after the government did not offer any bailout. The net worth of the company has gone down to negative ₹850 crores. Further uncertainty over the extension of lockdown is a serious problem for airlines.
While SpiceJet is facing hardships, IndiGo Airlines has been able to sustain itself with the free cash of ₹9,412.8 crores. As per the latest guidelines from the Indian government, all commercial flights have been suspended till 31st May. IndiGo, SpiceJet, GoAir have started taking bookings for international flights in June.
Where Is The Government?
Indian Government has declared no direct aid to Airlines in the Atmanirbhar package.
However, it has opened military airspace routes for commercial planes. This move will save fuel and time of commercial airlines. This gain is in a way compensation for the losses of lockdown. The remaining profit will help in reducing the flight ticket prices.
Moreover, the government has initiated the process of making India a global hub of the Aviation Industry. Under this initiative aircraft maintenance, repair and overhaul will become cheap and easily accessible for Indian Airlines in the longer run. Recently, the government put debt-ridden government-owned Air India’s 100% stake on sale.
The Global Aviation industry is facing a very tough time due to the pandemic. It is estimated that by ending of May 2020, most of the Airlines in the world will be on the verge of bankruptcy. One of the world’s oldest airlines, Avianca Airlines of Columbia filed for bankruptcy. Even Virgin Australia is looking for a buyer.
On the other hand, the US has bailed out commercial airline players with a support package of $25 billion. The national interest of nations over cooperation is a major threat to the aviation industry. Global Aviation Industry is likely to face a loss of $314 billion in revenue.