The sector of private jets is witnessing a progressive rise and the demand is here to stay: Abhishek Kulkarni, Chairman & MD- Urbane Jets
While there’s no telling on when and how the world will break free of COVID-19, here's a look at how the aviation industry is handling the brunt of it all writes Kulkarni.
The global pandemic novel COVID-19 has taken a colossal toll on the world’s economic activity with individuals, organizations, governments, and businesses having to modify rapidly to its on-going challenges of the crisis. Coupled with well-being and health implications, the threat brings along with it a grave disruption to all walks of life and the aviation sector is of no exception. With restrictions on social interaction, travel bans and an unexpected standstill in the commercial air traffic has hit the airline players' revenue and margin significantly. As a result, the global aviation industry has been dealing with a particularly difficult blow and is buckling up for turbulent times. Although the overall aviation industry is facing a serious challenge, recent history shows evidence of resilience and recovery to the crises.
While there’s no telling on when and how the world will break free of COVID-19, let’s take a look at how the aviation industry is handling the brunt of it all:
Impact of COVID-19 on the aviation sector
The International Civil Aviation Organisation had, in February projected a dip of 2% in international passenger capacity. By March, the same had dipped to 27% and is further expected to go down with the current lockdown in progress with no immediate ease of restrictions in sight.
The Asia Pacific Sector is staring at losses of more than $12 billion. The Indian Aviation Sector contributes a reported $70 billion. With an assumption that the sector takes a 20% hit, this wipes out around $1 billion in losses. The irony is that with the global pandemic having hit the world, the fuel prices have majorly condensed, which should have, in fact, encouraged growth for the sector. It may just turn out to be the sole saving grace for the aviation domain. Aviation is among the worst-affected spheres amidst the crisis that has taken the scale of a pandemic. As per the studies conducted by the International Air Transport Association, airlines internationally can anticipate a drop in passenger proceeds of up to $113 billion due to this crisis. Airfares have also come under pressure due to approximately thirty percent drop in bookings to virus-affected destinations. As a result, airfares to such terminuses have fallen by twenty to thirty percent. Domestic traffic development is also slowly being impacted by domestic travelers delaying or terminating their travel plans.
The near-time outlook for the aviation industry: With no financial package, currently being announced by the Indian government, it surely looks a long road to recovery for the already bleeding aviation sector. Airlines have started to lay off senior employees, cabin crew and pilots, route capacity is currently being reduced to 30 - 35%. Reduction in the fleet which was planned for a much later stage, is now being done way earlier than planned. The only planes currently allowed to fly are cargo medical flights, medical ambulances and military flights.
Post the lockdown, domestic operations primarily on key/metro routes should witness a staggered onset to operations. Indian carriers are making use of a sharp-eyed approach in recommencing operations on a domestic level, however, the rate of PLFs (periodic labor force) will be a key concern. For Indian carriers, Q1 is characteristically the sturdiest period while Q2 is a weak quarter. As the lockdowns are playing out in Q1, researches expect a measured progress in the crescendos of the Indian aviation industry only from Q3 of FY21.
How fleet management will be the need of the hour: The crisis having idled much of the aviation business, fleet readiness and maintenance considerations is of paramount significance to tackle the challenges posed by the pandemic. Essentially, strategic fleet planning is vital for airlines to yield a higher profit margin while providing the desired service frequency to meet stochastic demand. In current times the entire nation has been facing major logistical turbulences in carrying medicine, equipment and relief supplies from one part of the country to another. To serve this purpose airlines can offer strategic resources, aircraft and crew to transport medication, essential equipment, and relief material from one end of the country to another. These fleet services can cover major cities across India with an inclination to fly in the service of the nation.
Additionally, at the moment when the aircraft is not functioning, authorities must ensure to document any measures utilized to exercise and uphold the maintenance of fleet services. Aircraft to be sustained in an airworthy condition by continuously testing their fuel farm, confirm chemicals are warehoused properly and not leaking, keeping aircraft ready to fly in case emergency prerequisites ascend, such as humanitarian flights or other trips.
Future of aviation sector - social distancing and the effects
Aviation in the post lockdown period is going to be tough, from low demand to no duty-free shops, the sector will need to comply with the social distancing norms until the COVID-19 pandemic is over. The SOP being formulated by DGCA will mandate 180 seater aircraft to fly only with 106 Seats. With high net worth individuals preferring to fly private rather than first class, the impact is going to be twice as hard.
It has been suggested that the industry will take longer than anticipated to recover completely from the disturbance caused by COVID-19. To stormy clouds for the Indian aviation sector might persist since post the lockdown the airlines will be functioning on sub-par capacity which will further result in low ticket booking, drop in returns and low passenger load factor. Although it is anticipated that freight operations may add support to the whole traffic movement, but that is also expected to be passive given the slowdown of manufacturing units domestically and in most parts of the world. The drop in crude oil values may also not facilitate much as its advantage would be comprehended only once operations restart. When passenger operations do recommence, airports, as well as airlines, will be under severe limitations to safeguard there is no spread of the virus. Social distancing practices have to be followed on the airport premises and in flights, which will have to operate with only one-third occupancy to safeguard extreme social distancing between onboard passengers, this is predictable to push up ticket prices.
The sector of private jets witnessing a progressive rise: The domain of Private Jets is another sector of the industry that is currently been witnessing a great demand. Being favored by the wealthy community of the HNI’s, NRI’s and corporate biggies, the demand for private jets has been flourishing in a time when the overall industry has been engulfed by the maelstrom of the COVID-19 pandemic. While the regulars are flying as usual, however, there is a surge for First Time travellers. In the days of COVID-19, even the repatriation flights are now happening on private jets across the globe.
In Asia, where the outbreak originated, charter companies witnessed a sustained increase in new customers in the past two months as people who fled the virus in January returned in March from places.
Clients were choosing to charter because they did not want to be confined with hundreds of people with "unknown" travel histories, and noted that private passengers usually cleared customs and immigration separate from the crowded main airport terminals. The clientele that has the money to charter but generally wouldn’t are now doing one-off charters. Additionally, customers making use of private jets to move elderly parents are turning out to a more measured view of the market. What’s more is that private travels allow people to carry their pets on board if one is relocating.
Even now, with various countries’ having travel bans in place, private jets can bypass these bans thanks to loopholes: private jet passengers aren’t subject to commercial security and health screenings because they fly out of smaller terminals. At a time when every stray cough from three rows back sounds like a ghostly greeting from Typhoid Mary, those who can afford it are paying extra to sidestep crowded security lines and jam-packed planes and are flying private — which might be an attractive option for those who wish to flee the teeming cities for, say, a safe house.
Mounting demand for private jets and chartered airplanes: With COVID 19 having completely changed flying altogether, this situation is unlikely to alter even post lockdown. Once the flight services resume, passengers will be required to follow social distancing norms and avoid long queues and mass crowding at the time of luggage and while boarding flights. This situation has gradually moved the demand towards the booming sector of private jets which have minimal passengers on board, thus averting from over-crowding. Hence the community of frequent travellers like HNI’s and corporates honchos are moving towards private jets for their faster services and less passenger congestion.
More time for important things: If there's one thing that most of us can't seem to have enough of, it's time. Wouldn't it be nice to have an additional hour to finish up work at the office or even just a few more minutes of family time? Well, when you opt to fly private, you can do just that. Unlike commercial flights, chartering a private jet allows you to fly at your own schedule, at a time that suits you best. There are also hundreds of dedicated private jet terminals around the country to choose from to avoid the lengthy check-in process and security line at public airports. And the best part is, you don't have to get there an hour early. Arriving at the tarmac 15 minutes before your flight is more than enough. Also with private jets, you need not worry about your plane leaving without you.
Arrive at your destination faster than the anticipated time: Taking a private jet means skipping customs and immigration queues altogether. As soon as the plane lands, you can just disembark from the plane and climb into your ride. But aside from that, flying private tends to be much faster than flying commercial because private aviation is not tied to specific routes and schedules. Operators can plan their routes, while the jets often fly at a higher altitude than commercial airlines to avoid air traffic. All these factors, plus access to smaller airports closer to city centers, speeds up and simplifies the entire boarding-flying-disembarkation process.
Private jets on the ground: It starts on the way to the airport, smaller jets don't require the vast runways and staffs offered by key airports, thus enabling them to fly out of smaller spots. There are many minor airports available than major ones for you to boar the jet. This lessens the need for you to travel as far to get to one. They are less congested, thus making your flying a pleasurable experience. Furthermore, travelers need not deal with the TSA or long and never-ending check-in lines, thus proving to be a time-saving affair. And when you get off, your bags are moved right into your car, thus not requiring you to spend time at the baggage carousel. Most importantly fliers can fly when they wish to, with private jets taking measures to adjust their schedules to meet the prerequisites of the airline. This is totally the other way round in the case of commercial airlines.
Private jets in the air: One thing that distinguishes private jets from others is that they are not tied to the same hub and spoke networks utilized by airlines, so if your plane has plenty of fuel capacity to reach your destination, you can fly direct. Being equipped to limb faster than airlines, private jets are above crummy weather sooner and fly faster too. Commercial jets cruise around 35,000 feet while smaller jets characteristically fly higher thus putting them above the air traffic, so their paths are more direct and never compete with bigger planes for space issues. The additional suppleness allows the jets to capture better winds and evade adverse weather conditions too.
Revival Measures: The overall aviation industry has been scouting for effective measures to deal with the rippling effect of the pandemic. Post the lockdown, airlines and the civil aviation sector have planned to gradually resume operations initially with an abridged passenger capacity. The plans to restart services are still liable on the government’s decision to clearing the way for economic activity. Even globally, the situation continues to be perilous for airlines who have severely felt the heat of the outbreak. With the government stepping up with expanded financial relief measures, anticipating a V-shaped recovery looks unrealistic. The sector can definitely expect a U-shaped retrieval with domestic travel recuperating faster than the global markets.
Despite being susceptible, Indian airlines are in an improved position, compared with global counterparts. Post the coronavirus turbulence, the entire aviation industry throughout the world will perceive a drastic alteration in the way the industry functions. Time is racing by and it is very challenging to forestall growths and developments five days or even five hours ahead. Strangely, it might be easier to converse the long-term impact of this unprecedented tragedy on aviation that is about five years ahead. The upcoming years will definitely witness a surge in private aviation with the wealthy people considering the same as an effective alternative to scheduled air transport. Alongside to lend a saving grace to the aviation sector, appropriate government policies in this direction will further help to cushion the Indian aviation industry.
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