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Talking about the current Covid situation in the country and the complete lockdown imposed by the government, Singh, in an interview to ET Now, said that even though the crisis has brought the country’s aviation sector to a complete standstill, this is the perfect time to bring about structural reforms in the sector.
“People say that India only reforms in a crisis and if that is true, we should certainly use this crisis to bring about the reforms that we have sought for so long,” he said.
Talking about reports about flights being allowed to function with only limited capacity, the co-founder of the budget airline said that such a system may not be sustainable in the long-run.
Flying with a 60-65% passenger load is not viable and if the restrictions are in place for long, many of India’s airlines will find it difficult to fly profitably, Singh noted.
“Airlines are in a situation where sometimes 85% or 90% load factors also do not make us money because of the structure that we have around us,” he said.
Emphasising on the need for government stimulus, Singh said, “government will have to find a way to reduce on the cost side some of our costs if a situation like this continues.”
On the government’s requests to India Inc to avoid layoffs at this time, Singh said it would be very difficult to adhere to. “There is a huge amount of short-term pain, especially for those people who are not getting their salary, getting reduced salaries, getting delayed salaries, that we can never minimize,” he said.
The aviation industry has been the hardest hit industry in this crisis, he said, “but in all of this there is an opportunity for the aviation sector to re-look at the way we do our business.”
Many airlines in India are close to bankruptcy as their cash reserves are running out amid the nationwide lockdown. Almost all the Indian airlines, including SpiceJet, have introduced cost cutting measures such as pay cuts and leave without pay to deal with the coronavirus crisis.
The airline, on March 31, had announced that it would cut the salary of its top and mid-rank employees by 10-30 percent for the month of March.
India had imposed a 21-day lockdown from March 25 to curb the coronavirus pandemic, which was then extended till May 3rd. Consequently, all domestic and international commercial passenger flights were suspended for this time period.
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