Airports and airlines need each other to thrive, say Poonam Verma and Shivpriya Nanda of J Sagar Associates
Airports and airlines should join hands to revive the aviation sector, contend Poonam Verma and Shivpriya Nanda, partners at consultancy firm J Sagar Associates. An email interview:
Airports and airlines are often seen as adversaries as both have conflicting commercial interests. Will this slow down the pace of transformation of the aviation ecosystem post-Covid-19?
It is true that they are adversaries in some ways but they are also interdependent and need each other to thrive. Both serve the same customer: The passenger. But these ‘foes’ may soon have to come up with a strategy and think about becoming ‘allies’ if they want to survive in this post-Covid-19 ‘new normal’ and revive business in the industry. When the Indian aviation industry is able to fully recover from this crisis is still uncertain but as the saying goes — “never let a serious crisis go to waste”. Covid-19 has given the aviation industry an opportunity to reimagine its future.
One can see domestic air traffic revive, but international air traffic is yet to witness a growth…
Efforts should be made to revive the international passenger traffic with countries under the ‘air bubble’ arrangement with India. India has an ‘air bubble’ agreement with 22 countries and this arrangement can work effectively only if there is collaboration among governments, airports and airlines.
Except for rolling out guidelines, the government has not taken an active role in reviving the aviation sector. What kind of intervention should the government come out with?
The low passenger demand has resulted in airports and airlines being put into a situation where existing lease rent structures or other facilities to be paid for by airlines in terms of contractual arrangements with airports are no longer viable. A government package should focus on targeting the aviation ecosystem, including airports and airlines. While compensating the airports, the relief package should ensure that no additional pricing burden is passed on to airlines and passengers. Airports should also eventually decide to directly evaluate with airlines a mutually beneficial strategy that can be executed in terms of rent adjustments, deferrals and extensions for payments under contractual arrangements.
Q&A by Shivpriya Nanda and Poonam Verma, published in The Hindu Business Line.