India flight ban: Will government rescue airlines with a US-style bailout package?

The latest ban on commercial flights from India will further dent recovery prospects for the country’s airlines, still reeling from the devastation of last year. “Prior to the pandemic, India’s air travel industry was vulnerable - despite it having a huge market and all of its major airports being in expansion mode,” said John Boyd, founder of the aviation consultancy Boyd Company. “Most airlines were short on cash and suffered with weak balance-sheets.” Then came COVID-19, with India immediately grounding most of its airline services, international and domestic. Only Air India was allowed to operate, as part of the ‘Vande Bharat’ repatriation mission for Indians stuck abroad when lockdowns hit. Now, with a second infection wave sweeping the country and countries suspending flights from India, a fresh crisis is brewing for airlines. Several of them took the opportunity to launch routes to new markets – but all this may be coming to an end now. Vistara, a joint venture between India’s Tata Group and Singapore Airlines - with its business model focused so heavily on serving London’s Heathrow Airport – will be especially hurt by this latest round of travel restrictions, added Boyd. Low-cost carrier SpiceJet had signed an agreement with Avenue Capital Group in the US for the sale and lease-back of 50 new planes to be ordered by the airline. “This alliance will ensure a seamless induction of the planes in our fleet and help us plan better for the long term,” said Ajay Singh, Chairman and Managing Director, SpiceJet, in a statement last month.<br/>