Pummelled by the covid-19 crisis, the travel and tourism industry needs a survival, not just a stimulus, package from the government, said Rajesh Magow, co-founder and group chief executive officer of MakeMyTrip Ltd. The immediate need of India’s aviation and tourism industries is liquidity to be able to survive and rebuild their businesses, Magow said in an interview. Edited excerpts:
What relief measures have you sought from the government?
The travel and tourism industry is one of the worst-hit. It’s a crisis worse than all the previous major disruptions combined, including the Severe Acute Respiratory Syndrome, 9/11 attacks, dotcom bust or the global financial crisis. Unfortunately, this unprecedented situation is going to have serious and far-reaching consequences on the economic health of the country and the people.
The immediate need of the industry, including the aviation sector, is liquidity for the short- and mid-term to help meet fixed costs during the lockdown period, as well as for rebuilding businesses almost from scratch. So, any support on loans with easy terms for mid- to long-term would be of immense help. Loans could be extended looking at the track record of the companies and their potential paying capacity, but with a long-term view rather than taking a conventional conservative collateral-based lending approach. It’s not going to be an easy call by the banks within the defined norms of lending and non-performing assets, so the Reserve Bank of India will have to help make changes to ensure that the liquidity easing being done actually reaches the corporates who direly need it and that hopefully would help save millions of jobs.
Should there be some stimulus package for your industry?
It’s more apt to think of it as a survival package rather than a stimulus package. A stimulus package was needed before covid-19 to uplift the slowing growth rate of the economy over the past few quarters. It’s an existential crisis right now and hence the relief is needed to save the industry first. The industry is desperately looking for oxygen right now to come out of the intensive care unit first. While some companies with cash reserves will be able to stay afloat for the next few months, micro, small and medium enterprises would be impacted very badly if not supported on priority.
Do you think the country is staring at a recession? How severely will hospitality and travel be hit?
The global economy could tip into recession and India remains equally vulnerable as the rest of the world. With global financial markets going into a tailspin and demands plummeting rapidly, we are clearly heading into a deep slowdown in the coming quarters. Overall, India might end up doing better than the rest of the world on gross domestic product growth rate, but that would be more of a feelgood factor. The travel and tourism industry is the worst-hit sector and the recovery is going to be slow. It’s going to be a long-haul journey to ramp up the volumes to before covid level.
How do you think consumer demand could be revived after the lockdown is lifted?
With a staggered lift on the lockdown, consumer demand will also pick up in staggered phases. To begin with, industries catering to essentials such as fast-moving consumer goods and household products will be seen getting back on their feet. Essential travel is the one that we see pick up in the first few weeks, followed by domestic leisure as the situation eases and fear goes away from consumers’ mind. One thing is most certain that the consumer shopping journey will see a complete transformation. To get back on the consideration list of customers, the acceleration from offline to online may speed up like never before. At some level, a strong comeback strategy coupled with insightful offerings might prove beneficial for most brands.
How will covid-19 change the way your industry works?
In the best-case scenario, as the virus spread is contained, we may see the start of the recovery journey in the July, August, September quarter with essential and domestic travel starting first with restrictions. All the industry players will have to focus on taking sanitization and hygiene improvement and social-distancing related measures at every stage of the journey. Social distancing will become the new normal at least for a couple of quarters.
News Source: Livemint