Surviving the Pandemic: Airlines
Airlines are among the worst affected sectors and would do not seem to recover anytime soon. Some of the biggest players are expecting revenues to fall 90% in Q2. Apart from the revenue loss and paying for parking (~$1000 for a large plane in India), keeping idle planes airworthy requires periodic maintenance that accounts for sizeable costs. For instance, hydraulics & flight-control systems require protection against wildlife, engines should be turned on at intervals. Moreover, humidity can corrode parts for which hydraulic fluid, silica moisture absorption sachets, etc are required. Unlike a car, they are complex pieces of machinery.
Oil prices may offer some respite as long as major oil producers sell their products at loss-making prices.
Even as airlines are in a dreadful situation, they are making preparations for when passengers return to the skies. And I feel there’s a long way before they can operate at full scale as couple additional activities and rules by Aviation ministry will add to their miseries such as:
1) Revenue lost from blocked off middle seats
2) Cost of protective gloves and masks or PPE worn by the cabin crew
3) Regular & rigorous cabin cleaning with disinfectants
4) Redesign of an Airplanes similar to what an Italian manufacturer is looking into with glass partitions and an inconvenient reversed middle seat.
We’ll certainly see consolidation in this sector which already has very few players. Moreover, this is the final nail in the coffin for airlines that were already on a brink of collapse. There’s certainly a light towards the end of the tunnel, but surely, the tunnel seems to be very long.