Pandemic impact: Ground handling agencies appeal government to help, fear bleak future

It has been almost 15 months since India imposed a ban on regular commercial flight services to curb the spread of the pandemic which hit the country last March

It has been almost 15 months since India imposed a ban on regular commercial flight services to curb the spread of the pandemic which hit the country last March. Domestic operations, though suspended along with the overseas flights, resumed after a two-month hiatus on May 25, 2020. However, the prolonged suspension of international operations - considered bread-and-butter of ground handling agency operators - has had a profound effect on their business, with squeezing revenues and increasing losses.

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Ground handling is a key function of the aviation eco-system, involving activities such as passengers’ boarding and deboarding, their baggage and cargo, among others.

The sector, which is dominated by four-five major players, who handle ground handling activities of various international airlines and some domestic carriers at the country’s major airports, employs around 70,000 workforces.

Apart from independent ground handling companies, these activities are handled by some domestic airlines as well. With limited revenue generation owing to fewer flights, ground handling companies have been forced to take several mitigating measures such as layoffs and salary cuts, among others, to keep the business afloat.

Moreover, with the looming threat of a possible third-wave and continued uncertainty around the resumption of regular overseas flights, operators are sitting with their fingers crossed over business prospects in the near future.

‘In the worst situation’

The second wave of the pandemic has hit this capital and labour-intensive sector harder at a time when the domestic travel demand had recovered almost 65% of a pre-Covid level, said Murali Ramachandran, president of the Ground Handling Association Of India (GHAI) and CEO- India, Celebi.

“Aviation sector is in the forefront of the pandemic. Domestic demands started recovering from July-August last year, we were looking at a fair amount of recovery. We are in the worst situation. The impact of the second wave has dragged us back in time to July of last year,” Ramachandran said, who recently wrote to the government on behalf of the association, seeking financial succour for the loss-making sector.

According to India head of aviation advisory and research firm, Centre for Asia Pacific Aviation (CAPA), Kapil Kaul, ground handling companies at an industry level is estimated to have incurred losses to the tune of USD 125-150 million in the financial year ended March 2021, and that the impact of the pandemic on the ground handling firms is severe like all others in the aviation business.

“Our dependency is more on international flights and less on domestic. As much as 75% flights handled by us are international which remain suspended,” said Ramachandran.

Currently, limited international flight operations undertaken under the Centre’s air bubble agreement with various countries’ governments accounts for almost 15% of pre-Covid overseas flight operations.

“All this has put financial pressure on us. We were already struggling from last year. The second wave has beaten us very harshly,” Ramachandran added.

Ground handling employees lost jobs

According to data shared in the Rajya Sabha by the minister of state for civil aviation Hardeep Singh Puri in February, a total of 19,247 people lost jobs at airports- 12,646 in the ground handling agencies department, 6,981 at airlines and 170 at cargo operators during March-September 2020.

Going by this data, 33.5% employees working with the ground handling agencies lost jobs during the period.

The major ground handling operators, who work across the major airports across the country include Celebi, Air India SATS Airport Services Private Limited (AISATS), Bhadra Ground Handling Services, Indo Thai Airport Management Services.

Flight volumes dropped by 58%

The aviation sector is at the forefront of the pandemic. Domestic demands started recovering from July-August last year when the agencies had started looking at a fair amount of recovery.

“ In FY2020-21, AISATS flight volumes dropped by 58% compared to FY 2019-20 and led to a significant drop in revenue while our cost of operations could not be reduced at an equivalent rate due to the government’s Covid-19 regulations as well as the need to maintain a base level of resources to be prepared for recovery. This led to significant financial loss and a tremendous strain on the finances of the company. Moreover, the increase in fuel prices, as well as costs of acquiring additional Personal Protective Equipment (PPEs) created a further financial burden on our company,” said Ramanathan Rajamani, CEO of AISATS.

The Ground Handling industry cannot afford any further cuts in its service rates as the cost of handling an aircraft has increased substantially due to a reduction in flight frequencies and greater workload, and related costs in the area of disinfection and cleaning owing to the pandemic.

“AISATS is the first ground handler in India to have launched UV-C (Ultraviolet C Band) disinfection services for aircraft interior cleaning at Delhi and Trivandrum as we believe that introducing such innovative solutions will help boost passenger confidence in air travel and lead Indian aviation towards a faster path of recovery,” Rajamani added.

GHAI seeks help from aviation ministry

Given this situation, GHAI recently wrote to the ministry of civil aviation (MoCA) for help. “In the form of some support measures: we have asked the ministry for their support in the bank moratorium on interest charges on loans for a period of at least two years. We also asked them to consider instructing airport operators not to charge concession and rental fees until normalcy of operation is achieved and to consider a stimulus to sustain salary payments and allow subsistence allowances to minimize retrenchment,” Ramachandran said.

“We have taken a lot of effort to build skill sets and it will be unfortunate if the industry is pushed to go through massive retrenchments,” he added.

The association has also asked the government to create a structured plan and system to get international flight schedules back on track instead of reviewing them monthly as international business is their mainstay.

Ramachandran said that their revenues have reduced to 15% of what they have been earning. “We need financial support from the airports in terms of reduction in rent, at least in proportion to the business we have been doing.

The times ahead look very bleak for us. We had started rehiring when the second wave hit us, we don’t want to go for another round of reduction and retrenchment of people,” he said.

The sector had around 70,000 employees working for them but each company had to downsize around 25% due to the pandemic.

‘If there is no third wave, things may improve’

Prem Bajaj, chairman and managing director of Bhadra International ground handling agency, said that vaccination was the only hope for the industry, for faster revival. “The vaccination drive seems to have picked up since last few days, but to reach a meaningful percentage of vaccination we are looking at, at least closure of FY 2021-22, which means that this fiscal is unlikely to be any better than FY 20-21. Certain estimate predicts a worse 21-22 compared to FY 20-21,” said Bajaj.

The ground handlers unanimously said that another year of losses would cripple the entire sector substantially. However, they expect the recovery to the pre-Covid level to happen only in 2023.

However, the industry fears the impact of a third wave, if any, on them. According to Ramachandran, if there is no third wave by September then things may start improving. If every company opens up and nothing changes, international flights could come back to 50- 60% of the pre-Covid level.