MUMBAI (NewsRise) -- India plans to roll out a rescue package for the battered aviation industry as the nation's airlines ground planes and cut paychecks after the coronavirus pandemic brought travel to a grinding halt around the world.
In a bid to contain the virus spread, India last week suspended all tourist visas to the country and urged Indian nationals to avoid non-essential travel abroad. The government's directives came after the number of virus infected people steadily rose in the country.
The virus, which first emerged in Wuhan in China late last year, has ravaged countries in Europe, and the U.S., killing more than 8,000 people and infecting over 200,000 across the globe.
In India, the number of infected people touched 148 on Thursday, with three dead. Financial markets around the globe have been reeling under the impact of the pandemic.
Authorities are exploring the option of deferring taxes on those levies that are under the federal government, a top government official, who declined to be identified, said.
New Delhi may also look at offering deferrals on tax payments on jet fuel, lowering of air traffic control charges, and aeronautical fees, the official said.
"The government can only offer a fiscal or monetary incentive. Offering a monetary incentive makes no sense because how can we choose whom to give money," the official said, adding that the situation will be monitored for a month.
According to a Reuters report, the government plans to inject as much as $1.6 billion in the form of tax concessions for the sector.
The outbreak forced many countries to resort to emergency lockdowns and issue travel advisories, pushing the global aviation industry to the brink.
Many carriers, including Hong Kong's Cathay Pacific Airlines and Singapore Airlines have flagged substantial losses as they cut capacity and initiated employee pay cuts to tide over the crisis.
On Thursday, IndiGo, India's largest airline, asked its employees to take a pay cut as travel demand continued to dip.
"With the precipitous drop in revenues, the very survival of the airline industry is now at stake," IndiGo's Chief Executive Ronojoy Dutta wrote in a letter to employees.
"We have to pay careful attention to our cash flow so that we do not run out of cash. Unfortunately, this means that we have to reduce our costs in line with the drop in revenues."
Dutta said the company is instituting a reduction in wages of its employees starting April 1. The CEO is taking a 25% cut.
Earlier this week, Vistara, jointly owned by Singapore Airlines and India's Tata Group, and another low-cost carrier GoAir temporarily suspended all international operations.
Vistara said it has adjusted the domestic capacity for this month and the next, while GoAir said it has initiated a short-term and temporary rotational leave without pay program.
This will help the company counter the reduction in capacity, it said in a statement.
Another budget airline SpiceJet said Thursday it is temporarily suspending a majority of its international operations starting Mar. 21 until the end of April.
Earlier this month, the International Air Transport Association warned that airlines could lose up to $113 billion in revenue this year.
Aviation consulting company CAPA said most Indian airlines would go bust by May or June without government help as people abandon travel amid the virus spread.
India's aviation industry, the second-largest in the world, has already been on a decline as a slowing domestic economy squeezed passenger traffic.
The industry is barely recovering from the bankruptcy of Jet Airways (India), once the nation's largest private carrier, which halted operations last year after running out of cash.
CAPA expects Indian carriers to initially ground around 150 aircraft, including almost all the international fleet.
This number is likely to increase as more domestic operations are curtailed over the coming weeks, it said.
CAPA warned that the industry may be bracing for a combined quarterly loss of up to $600 million in the absence of any government help.
--Rituparna Nath and Dhanya Ann Thoppil