Turkey-headquartered aviation services company Çelebi Aviation, one of the largest independent ground handling companies in India, has been in the country for more than a decade now, carrying out ground handling operations at seven major airports of the country, including Mumbai, Delhi, Bengaluru, Hyderabad, Kochi, Ahmedabad and Kannur. The company employs around 8,000 people in India and is planning to expand its operations to other airports as well. In addition to ground handling services, the company also started providing cargo and warehousing services in 2009 with the establishment of Delhi Cargo Terminal Management India, the terminal that was previously wholly run by the government. A joint venture between DIAL and Çelebi Ground Handling Turkey, Delhi Cargo Terminal Management India is currently one of the largest cargo terminals by volume in the country.
Murali Ramachandaran, an industry veteran with more than 25 years of experience in hospitality and aviation sectors heads the India operations of the company. In an interview with THE WEEK, Ramachandran talks about the challenging times for ground-handling and warehousing scenario in the aviation segment, which has witnessed a steady drop in international flight and cargo operations due to the COVID-19 pandemic. He talks about the sector's expectations from the government and how the upcoming plans. Edited excerpts:
What are the challenges that you have faced during the lockdown?
The COVID-19 pandemic has adversely impacted industries and businesses across the world. Businesses and operations have come to a standstill and we are currently staring at a global economic recession. Among the affected industries, aviation is at the forefront and probably the most impacted. From our sector’s perspective, a global recession as a result of the pandemic will further make things worse. Currently, we are operating on a month-on-month plan to remain viable. Our cash flows have been severely impacted. Payment inflows of our dues from the airlines are also choked. With no meaningful fiscal relief as yet to this sector, the situation is quite challenging. All this while, our key priority has been to ensure salary payouts to our people during this phase and we have been ensuring the same thus far. However, we are unable to make any revised sales projections during such a time as things are unclear and premature.
When do you see the recovery happening? By when can we expect a revival?
We do not foresee business volumes to come back to 2019-level anytime soon. A slow paced recovery will see the sector getting back to the pre-COVID levels only by 2022. However, we do foresee various possible scenarios as to how the industry will probably recover in the near future. Recently, the Union government extended the capacity cap imposed on scheduled airlines on domestic flights to up to 60 per cent of the total capacity, up from 45 per cent, but we are yet to get an update on the operations of international scheduled flights barring the bubble flights. The industry, at large, needs immediate direct support from the government to survive from the impact of the COVID-19 pandemic.
How have the overall operations been affected?
Our ground handling and cargo warehousing sector is heavily dependent on international flights and a few domestic customers. Since the lockdown, our ground handling business has dropped by over 90 per cent. If we talk about Çelebi Delhi Cargo Terminal, our volumes were down by more than 85 per cent for a few months. But cargo has by and large recovered to some extent and currently stands at 65 per cent of pre-COVID levels. Without international flights returning, this volume may also be unsustainable.The ground handling and cargo warehousing industry is labour and capital-intensive. We have a high fixed cost base, which makes our position more precarious.
What kind of opportunities do you see right now for the ground handling companies?
COVID-19 has forced all of us to rethink conventional business processes, use technology as much as possible and integrate all applications. This situation will also hopefully make some airlines rethink their strategy to perform self-handling and focus on their core business. Hopefully, they will recast their vision on such matters and that’s an opportunity for businesses like ours. We are also engaging with airlines to restructure some of their processes and deliveries to bring costs down.
Where do you see your company in the next six months to one year?
As it seems, not much is going to change in the next six months. Despite the pandemic’s impact on our business, we remain invested with a long-term vision in this business. We are following up on some opportunities globally as well as in India. India is one of our key focus markets and we will continue expanding our footprint in the country. We would like to leverage on the goodwill created during all these years and will be glad to serve our clients in multiple airports in the coming future.
What is the future of the ground handling industry?
The ground handling industry’s health is clearly linked to how the airline industry recovers from this situation. If we talk about the future, we are uncertain of how the COVID-19 situation will pan out in the near to medium term, but we remain optimistic of its resurgence in the long term.
How has been your performance before and during the COVID-19 pandemic?
We have two aviation business verticals in India–ground handling and cargo warehousing. As a ground handler, we cover 65 per cent of the passenger traffic in the country in all the key metro cities such as Mumbai, Delhi, Bengaluru, Hyderabad, Ahmedabad, Kochi and Kannur. On the Cargo front, we are present at the IGI airport in Delhi which holds a 30 per cent share of aviation cargo traffic in the country. Since March 2020, ground handling came crashing down to as low as 10 per cent of pre COVID-19 levels. This situation has improved a bit primarily due to freighter movements and a few domestic flights. International passenger flights are negligible. Cargo, on the other hand, has improved at a faster pace and, as stated earlier, recovered better to reach 65 per cent of the pre-COVID levels.
What kind of push is required from the government?
The ground handling and cargo warehousing sector is heavily dependent on international flights and a few domestic customers. With the pandemic-induced lockdown and suspension of international flights, our businesses dropped significantly. We have made multiple appeals seeking intervention from the government and support from the airports and expect the government to come up with some solutions.
We suggest that certain reforms should be included in the current policies like a short to medium-term capability to keep employees on a subsistence pay to avoid job losses, a review of the highly regulated environment and a meaningful, interest-free working capital support. We have also sought a moratorium of 180 days on all payment obligations to airports.
