2 min read.Updated: 04 Jan 2022, 06:33 AM ISTRhik Kundu
Uncertainty over curbs and self-isolation rules is depressing demand
Listen to this article
NEW DELHI :
Indian airlines are again facing uncertainty as new government-mandated curbs over the spread of the Omicron strain threaten to derail the gains made in the past few months.
International air travel has already been impacted by the rise of new cases, with several countries and states resorting to flight and border restrictions to control the spread of the virus.
Though the number of cases requiring hospitalization and deaths due to Omicron is lower than the Delta variant, uncertainty over travel curbs, self-isolation rules, and high test and medical care costs is depressing travel demand.
“We entered 2022 with dark clouds and uncertainty. The next two quarters may be rough for the aviation sector, with airlines reducing capacity, especially on the international front. We don’t yet know how severe or not the Omicron variant will be," said Mark Martin, chief executive of aviation consulting firm Martin Consulting LLC.
“We do expect some kind of normalcy to come in by April, though," he added.
Akasa Air, which is set for a summer launch, is expected to disrupt the market dominated by low-cost carriers (LCCs) like IndiGo with its ultra-low-cost carrier (ULCC) model and the backing of a deep-pocketed promoter like billionaire Rakesh Jhunjhunwala.
The airline has already placed an order for 72 Boeing 737-8 Max aircraft for $9 billion, paving the way for its launch.
“Akasa is expected to disrupt the low-cost carrier market, led by IndiGo but only after reaching a substantial scale. In the short term, the well-funded airline may cause a churn in top talent in the industry and impact airfares on certain sectors," said a senior official with a Gurugram-based airline, who spoke on the condition of anonymity.
The relaunch of old behemoths, Air India and Jet Airways, under the ownership of Tata Group and Jalan-Kalrock consortium, respectively, is expected to further intensify competition in the domestic aviation sphere.
While the Tata Group is expected to take over Air India and its unit Air India Express from the government in January, the new owners of Jet Airways—UAE-based businessman Murarilal Jalan and Kalrock Capital—are waiting for the revalidation of the airline’s air operator’s permit to begin operations in early 2022.
However, the Jalan-Kalrock consortium has delayed the airline’s launch several times after making similar announcements.
Shareholders of InterGlobe Aviation Ltd, which operates the country’s largest airline IndiGo, last week voted to remove curbs on promoter share transfer, signalling the end of a protracted feud at the airline.
The amendment to InterGlobe’s Articles of Association (AoA) is expected to lead to the exit of co-founder Rakesh Gangwal, who has been locked in a bitter battle with another co-founder Rahul Bhatia.
Until the amendment, the AoA’s clauses entitled either Gangwal or Bhatia the first right to purchase the other’s shares when one decided to exit the company. The amendment allows either of them to sell their shares to any third party.