Government's economic stimuli critical for aviation sector revival, says Rajeev Jain, CEO, Mumbai International Airport

Source: Reuters

For the upcoming Budget 2021, Rajeev Jain, CEO, Mumbai International Airport says:

The aviation sector is one of the most affected sectors as a result of the COVID-19 pandemic and related restrictions and lockdowns undertaken by various countries to prevent the spread of the virus. Although in India, domestic air travel has revived to a certain degree, international travel still remains subdued due to the difference in regulations across countries. Furthermore, due to the intermittent waves of the pandemic, the revival of international travel does not seem to be on the horizon. According to an early analysis published by the Airports Council International (ACI), airports worldwide are likely to lose revenue of approximately USD 104 billion, about 60% of the normal revenues earned by airports. International Air Transport Association (IATA) estimates that airlines will witness a revenue loss of USD 510 billion, approximately 50% of their normal annual revenues. Overall, the domestic sector is expected to achieve pre-COVID levels of passenger traffic by 2023-24, while international traffic will take a longer time to return to normalcy.

With an estimated GDP contraction of 7.5 percent in India for FY21 and an expected worldwide contraction of 3 percent, overall normalcy and economic revival will take a long time, even after effective vaccination.

The Kamath committee has recommended restructuring norms for the aviation sector, but the revival of the sector largely depends on economic stimuli by the government. Government has enhanced liquidity substantially by various measures, additional initiatives are still required to revive the economy.

A valuable lesson learnt, particularly for the aviation sector, is that there has to be sufficient in-built liquidity available to airlines and airports to withstand such catastrophes.