While customers will have to get used to restricted access around an airport, airlines will re-look the way they buy aircraft
As the aviation sector waits for the government’s nod to resume operations, it is also going through a reset mode.
From the way airlines buy aircraft, or how customers move around an airport, to even the salary structure of cabin crew and pilots, the sector may see a new normal.
How is it going to change the way passengers travel?
Apart from tickets and ID cards, you will also need to wear a mask and gloves, for the CRPF personnel to let you past the entry gate.
Once past, the customer will have to heed a host of new guidelines. This is what Delhi and Mumbai airports – the two busiest in the country – have requested:
Carry minimal luggage, check in from home and use cards for transactions.
Moreover, expect restrictions on moving around the airport. Hoping to hang around with friends or relatives, at a bar, or a restaurant? You may, but at 1.5 meters between each other.
“The seating arrangements at the food court as well as in the terminal building are reshuffled in a manner that promotes social distancing,” said GVK MIAL, managing the Chhatrapati Shivaji Maharaj International Airport in Mumbai.
And do not get irritated if washrooms are restricted, as these will now be cleaned every hour.
Boarding will be slower, so do not hurry. Both airline and airport executives are under strict instructions to maintain social distancing as customers queue up. Especially, do not rush towards the bus to grab a seat, it may be marked X, meaning it is unavailable. There will be few available, to ensure passengers do not sit too close to each other.
In-flight services will not be the same. Get used to cold sandwiches; hot meals would be off the menu for a while to reduce interactions with the crew.
Suggestions that the middle seat should be kept empty have not been taken kindly by the airlines. Simply because that would steal airlines about one-third of their capacity, and that can be made up only by steep fares. But, fares may not climb north soon enough, with traffic expected to remain subdued because of COVID-19 worries.
Clearer picture will emerge as we get closer to resumption of services.
SLB model or outright buy?
Most of the airlines all around the world, and in India, follow the sale and lease back model when it comes to expanding their fleet. Airlines buy the aircraft from an Airbus or a Boeing, sell it to a leasing company, which in turn leases it back to the carriers.
The model was championed in India by IndiGo, which briefly flirted with the idea of buying its aircraft and then got back to the SLB mode.
Even though the model helped airlines save money, it has come to bite them during the present slump caused by COVID-19.
IndiGo, the country’s largest airline that also has the biggest fleet, paid Rs 5,373 crore in aircraft and engine rentals in the 2019 financial year. SpiceJet paid Rs 1,296 crore.
That may change now. “The smarter airlines will have achievable plans where they will buy aircraft instead of SLBs,” says Nitin Sarin, Managing Partner of Sarin & Co, which specialises in aviation law.
Not just that it saves money, adds Sarin, but they can use it as collateral to borrow money if they own the asset.
“But if they do not own the planes at all, they cannot go to a bank and say ok, I will take a loan against this aircraft,” says Sarin.
The first signs will come when airlines receive the next delivery.
Salaries, a downward shift
Nearly all airlines, including SpiceJet, GoAir and Vistara, have either cut salaries or sent employees on leave without pay.
Unfortunately, for employees, this is not the end to the trim in their pay.
SpiceJet has already changed the employment contract of its ‘internal upgrade pilots’ – possibly first officers and captain trainees. It has also restructured the salary of all cabin crew, from May 1.
“It is inevitable. But for a business owner, the reduction makes a big difference. As a business owner, I too would look at resetting all these fixed costs in my control,” said a senior executive from the industry.Lawyer Yeshwanth Shenoy pointed out on Twitter that other airlines could soon follow.