Indian Aviation & More


Indian aviation sector begins to unspool

Amid grounded flights and months of ticket refund, it is not an easy time to be in the aviation industry. Indigo CEO Ronojoy Dutta sees a long 18-24 month path to getting anywhere close to pre-covid levels. Yesterday, the airline announced an addition 5.5 days of Leave Without Pay for pilots and further salary cuts which sources say could be in the range of 40%. Vistara announced a 5-20% pay cut till Dec 31st, for 40% of their 4000-strong staff. To offset these effects, Spicejet and Air Asia seem to have found some refuge in charter flights.

Why else is aviation in the news? In India, two specific employee terminations in the industry are making news. Early last month, Go Air employee Asif Khan found himself in the middle of a muddle with the classic elements of identity theft and communal tweets. While his termination was revoked, the suspension stands subject to a cyber cell investigation. Air Asia India finds itself in a bigger mess with DGCA now investigating the safety concerns expressed by terminated employee, Youtuber and alleged whistleblower Gaurav Taneja.

How are international airlines faring? Bigger the airlines, bigger the hit. Earlier last month, Emirates announced 600 pilot layoffs bringing their total number to 792. Southwest Airlines which has never laid off or furloughed employees in it’s 49 year history is trying measures like extended leave and buyback offers. British airways got a rap on it’s knuckles from the government for trying to cut jobs and change T&Cs for furloughed staff. Different players will have to gradually find their own comfort level in getting back to their feet.

India’s fiscal deficit all set to cross the line

Yesterday came some not very surprising news. In the first two months of FY21, namely April and May 2020, India has already reached almost 59% of the current FY21 fiscal deficit target. The government had budgeted for Rs. 7.96 Lakh Crore or 3.5% of GDP long long back in the pre-coronavirus days of February. Now, neither of the figures are expected to stay sacrosanct. The fiscal spending will inch upwards (hopefully slower than the 27% gallop it has made over last year in the first two months) and the GDP is bound to shrink (by almost 5% if the IMF figures come true).

Silver lining: Gross tax revenue did pick up pace in May as compared to April, narrowing the contraction compared to last year from 44% to 37%. CGST led the way, increasing by more than three times from Rs. 5934 Crores n April 2020 to Rs. 18,961 Crores in the very next month. Operation Unlock may not be an overnight switch to pre-covid levels but the tap is beginning to trickle back a little.

Should we be worried? As IMF labelled the times, this is a crisis like no other. Recovery will require all possible government support. In fact, India is one of those countries where the promises of direct spending have been much lesser. In May this year the fiscal deficit of US, which is now unofficially known as the land of money printers, doubled in comparison to last year. So, even with such bad numbers, we might just do okay.

US trail of retail bankruptcies

In history books, when future generations read about the coronavirus pandemic, one of the bread crumb trails they are likely to follow is the retail bankruptcies in the US. With a more organised retail industry and better access to bankruptcy filings, the grim picture is already emerging there. Some of the well-known national retailers including J.Crew, JC Penney and Neiman Marcus have already filed for the dreaded b-word. A report by Coresight Research has predicted that the US could see 20000-25000 closures this year, with 55-60% coming in from mall locations.

Changing retail strategy: Microsoft took the pandemic as a sign to permanently bring the shutters down on their 83 retail stores, mostly in the US. The bill for the exercise comes to $450 million considering asset write-offs and the likes. Although, the company does intend to “reimagine” experience centres in London, New York city, Sydney, Redmond campuses. PR best practice? Always drop in an element of mystery and keep them coming back for more.

Not the same for everyone: Lululemon, the popular athleisure brand with a good click and mortar presence has been able to offset some of the pandemic stress. There has been a 150% jump in Australia and 170% in Europe when it comes to ecommerce sales. The brand’s optimism for the future can be seen in new store announcements and their latest acquisition of Mirror (an at-home fitness startup) for $500 Million.


Much ado about very little: Yesterday the dread-striking words “Prime Minister will address the nation” were uttered for when the clock struck 4 p.m Turned out that the marketing was better than the product. In this address, the main announcement was a decision to extend the benefits under Garib Kalyan Anna Yojana till November end.

Tata Steel defies maths rules: Despite an exceptional loss item of Rs. 3406 Crores, 20% drop in revenues as compared to last year and muted future demand, Tata Steel’s share prices opened at almost 5% premium today. If you thought three negatives never made a positive, welcome to Indian equity markets.

China sounds the death knell for Hongkong’s autonomy: Going fundamentally against the “One country two systems” rule agreed upon during Britain’s handover of Hongkong, China passed the National Security Law. Under NSL, Beijing can now punish any act considered a threat to the mainland, to be monitored by special police units. Pop question for the history buffs. Déjà vu with the Rowlett Act?

EU opens up further: In a bold move for the times of corona, European Union has decided to open it’s borders to citizens from 15 non-European countries. This entitlement had a T&C only for China who needs to reciprocate the gesture. India has not made it this time but unlike Delhi University, we are sure to get a seat here in some future cut-off list. Although, we have good company with the Americans in this.

Edtech having it’s moment of glory: Still grappling with this new age of digital education? Someone’s technical challenge is another’s money minting opportunity. Vedantu, an app that provides online training for engineering and medical college entrance exams, has doubled in valuation during lockdown to a mind boggling figure of $600 million. This is as per their latest round of funding.


Markets remained muted once again, moving slower than a snail’s pace. Quite a contrast from the most common headline yesterday of this being the highest quarterly rally of the market running about 23.5% for Sensex and almost 27% for Nifty in a short span of three months.

Of course, this wilfully ignores the fact that there was a 37% odd drop in a much shorter duration of Mid-Feb to Late-March. Or that we may have hit a longish plateau before market commences their uphill ascent again towards the 17-19% remaining cover-up just to reach the February levels.

As they say, statistics are like mini skirts, enticing but hiding the most important parts.

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