Home / Companies / Airlines emerging from covid set to fly into fresh competition

NEW DELHI :  

After a mixed performance in the March quarter when air traffic rebounded from a pandemic-scarred January, the emergence of two airlines, Akasa Air and Jet Airways (India) Ltd, is set to intensify competition in India’s largely loss-making sector that was looking to emerge stronger in the first quarter of the new fiscal year.

Billionaire Rakesh Jhunjhunwala-backed Akasa Air plans to launch its first commercial flight around June, co-founder and chief executive Vinay Dube said at an industry event last month. Meanwhile, Jet Airways, under the new ownership of the Jalan-Kalrock consortium, is hoping to restore the grounded airline’s air operator certificate (AOC) within two months, media reports said.

Revalidating Jet’s AOC will allow the airline resume commercial flights, nearly three years after it was grounded due to a severe cash crunch.

Though demand has recovered, rising oil prices have been a dampener, said a senior airline executive, who didn’t want to be named.

“The emergence of Akasa Air and Jet Airways will mean more competition on certain routes. They will probably grow at the expense of smaller and financially weaker airlines," the person said, adding that intense fare competition is likely on certain routes with the entry of the two airlines.

Indian airlines will incur losses of about $4 billion, excluding any adjustments, during 2021-22, according to aviation consultancy Capa India’s mid-year outlook for the last fiscal. Actual losses could be more, as Brent crude prices have climbed more than 20% since February. On an annual basis, Brent crude prices are up 78%. Jet fuel prices in India are currently at a record high.

However, an easing of restrictions on the international front means airlines can now operate scheduled international flights after a two-year pandemic-induced hiatus. International flights offer the opportunity to earn more revenue, with higher yields than domestic flights.

“Following the easing of restrictions, we are witnessing a huge demand for international travel. We hope that this enhanced connectivity with various destinations across the continent will provide a boost to the travel and tourism sector while proving to be a catalyst for economic revival," said IndiGo’s chief commercial officer Willy Boulter. “We have started with 150-plus international flights from various destinations in India," Boulter added.

A Vistara spokesperson said earlier that the resumption of scheduled international flights will stimulate demand and help the industry manage the increase in ATF (aviation turbine fuel) prices.

Other airline spokespersons didn’t offer comments.

Indian airlines have been allowed to operate up to 1,466 weekly international departures during the summer schedule between 27 March and 29 October.

Among Indian airlines, IndiGo has been approved the lion’s share with 505 international weekly departures, Air India (361), Air India Express (340), SpiceJet (130), GoFirst (74), and Vistara (56). However, a further rise in oil prices may leave airlines in a precarious state as they may be unable to completely pass on the cost to passengers without impacting demand.

“With ATF becoming costlier, domestic flight prices have seen a steep rise of as much as 60% across some popular routes," said Aloke Bajpai, co-founder and group CEO of travel services firm ixigo. “We have noticed an increase in search queries for travel due to pent-up demand; however, bookings are still not growing in line with searches due to high airfares. Travellers are still in wait and watch mode to see the best time to make bookings," Bajpai added.

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