SpiceJet And GoAir Take Emergency Government Loan

As Indian airlines continue to battle the storm, some have reached out to the government for emergency aid.…

SpiceJet And GoAir Take Emergency Government Loan

As Indian airlines continue to battle the storm, some have reached out to the government for emergency aid. Under the program, SpiceJet is guaranteed ₹127.5 crores ($17.1mn), while GoAir will get 25.6 crores ($3.45mn). The news comes as the government steps up efforts to help the aviation industry, although still remaining far from any direct stimulus.

SpiceJet and GoAir have both been facing serious financial headwinds due to COVID-19. Photo: Getty Images

Quick

In a statement before Parliament, seen in Mint, Civil Aviation Minister of State VK Singh spoke about the ongoing aid to the aviation industry. Under the Emergency Credit Line Guarantee Scheme (ECLGS), which was only extended to aviation in late May, the government has given out ₹349 crores ($46.9mn) in loans.

Only two airlines have opted to receive funding from the program, SpiceJet and GoAir. SpiceJet’s request was the most recent, under Phase 3.0 of ECLGS, and the struggling low-carrier is guaranteed ₹127.5 crores ($17.1mn) to help support it through the crisis.

GoAir A320 SpiceJet
With the second wave crippling airlines in May, both carriers have jumped at the chance for extra capital. Photo: Getty Images

Meanwhile, GoAir has taken a much smaller loan under Phase 2 of ECLGS, amounting to 25.6 crores ($3.45mn). However, this could be in addition to the massive ₹800 crore ($108.6mn) credit line from banks that is backed by the same program.

However, it isn’t only airlines that are benefitting from this emergency loan scheme. Smaller companies in the aviation industry like ground handling firm Bird Flight Services Mumbai (₹8.5 crores/$1.1mn), CAE Simulation Training (18.4 crore/$2.5mn), and eight others have received varying amounts of funding to survive the prolonged downturn.

Important

The government extended coverage of emergency loans to nearly all aviation-related companies in May of this year. The decision came after passenger traffic fell to its lowest level in over a year amid a catastrophic second wave of COVID-19. To ensure companies could survive the fallout, ECLGS became far more accessible to the industry.

These loans will be beneficial in the short term, mainly in helping carriers survive the pandemic. SpiceJet has had to “defer” salaries for two months and institute huge pay cuts to keep flying, and has lost substantial market share.

GoAir A320 engine Getty
GoAir has made a loss for a few years now and began the pandemic with a rapidly growing debt pile. Photo: Getty Images

Meanwhile, GoAir’s mounting debt has become a huge concern for the airline. While the carrier is planning an IPO to help pay off its massive dues, an ongoing pause means it could be a while before it gets adequate funding. Until then, every penny will count towards continuing to fly.

Rebounding now

There is good news on the horizon, however. Domestic passenger traffic has made an impressive recovery in June and July, with both GoAir and SpiceJet now seeing load factors of over 70%. This will go a long way in boosting revenues and allowing them to add further capacity in the coming months, increasing their market share once again. For now, any government assistance to the industry will be seen as a positive step.

What do you think about airlines drawing from the ECLGS? What more could the government be doing? Let us know in the comments!

Source : Simple Flying More   

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easyJet CEO: UK Needs To Remove Expensive And Unneccessary PCR Testing

During a recent Simple Flying webinar featuring easyJet CEO Johan Lundgren, the airline chief called for the removal…

easyJet CEO: UK Needs To Remove Expensive And Unneccessary PCR Testing

During a recent Simple Flying webinar featuring easyJet CEO Johan Lundgren, the airline chief called for the removal of preflight PCR test requirements, which he summed up as expensive and unnecessary. Considering the fact that the cost of two PCR tests costs more than most roundtrip airfares with the airline, Lundgren sees this as a huge factor in suppressing travel- particularly for his airline and its low fares.

Lundgren is vocal about the need to remove PCR testing in favor of cheaper forms of testing when necessary. Photo: Getty Images

During the July 29th conversation between Simple Flying’s Joanna Bailey and easyJet CEO Johan Lundgren, the airline chief repeatedly criticized the requirement for PCR testing. On the topic of customer confidence to make reservations, Lundgren noted that “expensive and unnecessary PCR testing” was one factor present in suppressing demand.

An expensive test

Criticizing the requirement for PCR testing, Lundgren said, “decision-makers don’t understand that [PCR testing] adds on a very, very expensive cost to the journey to which a lot of people say, ‘look, it’s out of reach for me, I can’t do that.'”

The airline CEO notes that the average fare of an easyJet return ticket from UK to an international destination is, on average, £130 (equivalent to $180). PCR tests, on average, he says, cost £100.

“You don’t need to have a PhD in price elasticity to recognize that this is going to have a big impact. So, key thing now is that they remove PCR testing…They should do like everyone else is doing, have the lateral flow test”

It should be noted that lateral flow tests cost significantly less than PCR testing- about 1/2 or 1/3 of the price.

Lateral flow tests can be about 30% of the cost of a PCR test. Photo: Getty Images

An unnecessary test?

On the topic of these types of tests being unnecessary, Lundgren said that PCR tests being used for green and amber list travelers were only being subjected to genomic sequencing 2% of the time. More simply put, Lundgren asserts that one of the main purposes of conducting the more accurate (and more time-consuming) test- ‘genomic sequencing’ – is only taking place a fraction of time time.

This is how the US Centers for Disease Control and Prevention describes genomic sequencing:

“Genomic sequencing allows scientists to identify SARS-CoV-2 and monitor how it changes over time into new variants, understand how these changes affect the characteristics of the virus, and use this information to better understand how it might impact health.”

As a satisfactory stand-in to PCR testing, Mr Lundgren advocates for the use of “Lateral Flow Testing” instead, saying that this form of screening is much more available and much more affordable, “which evidently is just as effective.” But is this really the case?

easyJet
PCR tests are more expensive than most airfares with easyJet. Photo: easyJet

Lateral flow testing appears to be far less accurate

The UK’s NHS points out that rapid lateral flow tests are for people “who do not have symptoms of COVID-19” and “give a quick result using a device similar to a pregnancy test.”

Of course, this quick result has its drawbacks. According to Gavi, a recent study concluded that the average sensitivity of lateral flow tests (LFT) was 72% among people with COVID-19 symptoms and 58% for people without symptoms. “This would mean that for every 100 people infected with COVID-19 who had symptoms, only 72 of them would test positive on an LFT.” The website adds that because of this relatively low sensitivity, “a negative test result cannot guarantee that you aren’t infected – false negatives are reasonably common.”

Therefore, if this is truly the case, then Mr Lundgren’s assertions that LFTs are “just as effective” would be false. While we can agree that PCR testing is onerous, expensive, and a massive barrier to travel, the alternative rapid test appears to be too unreliable as a stand-in. If countries want to maintain some control over arrivals, PCR testing, sadly, might be the most reliable method in addition to vaccination requirements. Ultimately, however, as we’ve seen with the Tokyo Olympics, vaccinations and testing can only do so much, and, even with the tightest controls, COVID-19 still manages to sneak past borders.

What are your thoughts on PCR testing as a travel requirement for certain countries?  Do you agree that it’s expensive and unnecessary? Let us know in the comments.

Source : Simple Flying More   

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