Ground handling and cargo warehousing sector is heavily dependent on international flights and few domestic airline companies. Since the grounding of airline operations, business has dropped by over 95%, says Murli Ramachandran, chief executive officer-India, Celebi Aviation, a Turkish ground handling company which operates at all major international airports in India. Edited excerpts from an interview.
How has your sector been affected by the lockdown imposed to contain covid-19?
Amongst the impacted industries, Aviation is in the forefront and probably the most affected. Our Ground Handling and Cargo warehousing sector is heavily dependent on international flights and a few domestic customers. Since the lockout, our business had dropped by over 95%. We have a very high fixed cost base which makes our position more precarious.
Are you looking for some relief measures from the government? If so, what are your requests?
We have made multiple appeals seeking intervention from the government and support from the airports. Some of these are as follows -- financial support for reimbursement of wage bill, deferment of employee related statutory dues like PF & ESIC without any interest, moratorium on banking related repayment and expenses for a period of one year. Also, the period is very short for GST payments to be made on realization instead of accrual. We have also sought a moratorium of 180 days on payments due going forward and collateral free borrowing at low interest rates for working capital.
Should there be some stimulus package for your industry?
Yes, there should definitely be stimulus package for the industry as it’s the need of the hour. We however, are very skeptical as to how such stimulus would flow through to industry stakeholders like us. The timing for providing relief is also very critical. Hope it’s not too little – too late.
Do you think the country is staring at a recession? How severely will your industry be hit? Have you revised your sales growth?
We are definitely staring at a recession, and this time a global one. The aviation industry too has evidently been hit severely. Though India is doing relatively better than other countries during this crisis, yet from our sectors perspective a global recession will spell doom for businesses like ours. Currently, we are literally operating on a month-on-month based plan to remain viable, as we also have employees to take care of. Our payment inflow (of our dues) from the airlines has got choked with no meaningful relief been received from the airports or the government.
Our cash flows have been severely impacted. We don’t have any visibility on how soon and how many foreign carriers would re-start. Making any revised sales projections during such a time will be challenging as things are unclear and pre-mature. However, we do foresee various possible scenarios as to how the industry will probably recover in near future.
How do you think consumer demand could be revived after the lockdown is lifted?
Specifically speaking of aviation, the start point will be when people are less scared of coming out of their homes. Thereafter, I believe a lot will depend on how we build in safeguards and procedures to provide the necessary comfort to get people to fly again. From the international traffic stand point, this may be more complex. It seems like flying, as we knew, will go through some dramatic changes (just like after 9/11). All these changes will bring in new challenges in terms of how we handle planes, passengers, freight, immigration processes, employee handling etc. On the sector per say, it could probably take about three years for us to reach 2019 levels.
Will you be looking at either salary cuts or job cuts?
That is not something we are planning as of now. We are instead discussing various other options. Most organizations are looking at a reduced work / pay scheme to be implemented in the short and medium term. Given that recovery may not be immediate and the industry will go through an imminent downturn, some difficult decisions will probably be unavoidable in times to come.
Are you looking for loan moratoriums beyond the three months suggested by RBI?
Yes, we have requested for a moratorium of one year.
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