Indian aviation’s revival may take longer, warns IATA boss2 min read . Updated: 28 Jul 2021, 12:17 AM IST
- Capacity curbs and price caps put in place by the govt are harming the industry: Willie Walsh
The Indian government should remove capacity curbs and price caps put in place during the covid pandemic as these regulations restrict competition, market access and growth of the airline sector, Willie Walsh, the director general of the International Air Transport Association (IATA), said on Tuesday.
The curbs may have been put in place to protect weaker airlines, but there are other ways to do so, such as providing direct financial assistance, as done by countries such as the US, Walsh said.
In April, Walsh took over the top position at IATA, a trade body that represents more than 290 airlines across the world. He said he is surprised to see the government resort to restrictive measures as Indian aviation, especially on the domestic front, has registered big growth during the past decade.
“Recovery (of the aviation sector) is significantly impacted by regulations," Walsh said. Passenger demand will recover when the government-imposed restrictions are relaxed, he said.
Major aviation markets across the world are expected to recover to their pre-pandemic levels or 2019 passenger traffic levels by 2023 and in some cases 2024, depending on geography, according to IATA.
India remains an outlier in comparison to other domestic markets such as the US, China and the EU, which are seeing growth, and it is expected to return to 2019 capacity only by 2023-24, Walsh said.
Many Indian carriers have reduced their fleet size, retired older aircraft, reduced jobs and capacity and thus their ability to reintroduce capacity last seen in 2019 is restricted, Walsh said.
“Given the stress on their balance sheets, they will be less prepared to take risks," he said.
IATA has been pushing governments to reopen borders, do away with tough quarantine measures, and digitally manage vaccination and testing certificates amid the challenges posed by the pandemic.
The trade body, which includes Indian airlines such as Air India, IndiGo, Vistara and SpiceJet, expects airlines operating in the Asia-Pacific region, including India, to report combined losses of $7.5 billion during calendar year 2021, down from $31.7 billion during 2020.
Meanwhile, airlines globally are expected to lose $38.7 billion in 2021, down from more than $118.5 billion of losses in 2020, IATA said at a media briefing following its 76th annual general meeting last November.
“There’s a real risk of airline failures, especially medium and small airlines. So, IATA has asked governments to intervene," Conrad Clifford, regional vice-president, Asia Pacific region, IATA, said in a virtual presentation.
There is plenty of evidence to support that passenger demand in India exceeds capacity, Walsh said.
“If capacity constraints were removed, there would be demand (from airlines) for more flights," Walsh said. Fare caps, as imposed by the Indian government, distort competition, he said.
India allows its airlines to operate up to 65% of their pre-covid capacity. These restrictions are expected to ease in the coming months with a decline in fresh covid-19 infections and a pickup in the vaccination drive.
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