Covid-19: Indian aviation awaits govt assistance

According to aviation consultancy firm CAPA India, the U.S. has announced a $71 billion support package for the aviation sector from which airlines can access up to $25 billion of grants “for the continuation of payment of employee wages, salaries and benefits” for a period of six months. According to CAPA India, Virgin Atlantic has reportedly sought government assistance for loans and guarantees of over $600 million. The Government of Singapore, too, announced a support package in excess of $500 million for its aviation industry. The package includes a jobs support scheme “by which the government will subsidise 75% of salaries up to a certain threshold, to enable companies to maintain staff on their payrolls. In addition, there will be rebates on landing and parking charges and rental costs,” the CAPA India report stated. “In a very decisive show of support for the national carrier, the government investment arm, Temasek (which is the majority shareholder in Singapore Airlines) will support a $10 billion rights issue involving a combination of equity and mandatory convertible bonds. The bailout packages are a clear indication of how bad the impact of the Covid-19 pandemic has been on airlines across the world. “Given the limited resources at the disposal of the Indian government it is likely that the relief package shall consist of waivers/deferment of airport related charges; extended credit period for dues to OMCs; and moratorium on liabilities,” read a research report by Prabhudas Lilladher. That said, in India, many airlines are planning social distancing measures like keeping every other seat empty. “It is for all these reasons that government financial support is essential else the entire industry which drives 3% of the GDP, may collapse.”