Aviation industry looks to reduce capacity as outbreak may affect international traffic growth
Both Air India and IndiGo, which suspended flights to China and Hong Kong, are bracing for a financial impact
NEW DELHI :
Airlines in India are bracing for turbulent weather as a fast-spreading Covid-19 epidemic leads many to shun air travel.
Vistara, run by Tata SIA Airlines Ltd, has skipped Tokyo for its first long-haul international flight in the June quarter and will instead tap either London, Paris or Frankfurt because of a sharp slump in air travel demand in Asia, a person aware of the matter said. Vistara has already cancelled about 54 flights to Thailand and Singapore for March.
National carrier Air India Ltd and InterGlobe Aviation Ltd-operated IndiGo have suspended flights to China and Hong Kong while SpiceJet has suspended flights to Hong Kong. Over 3,100 people have died from Covid-19 infections that surfaced in China, while the number of those infected stands at over 91,000.
Air India, which has suspended flights to China and Hong Kong till 30 June, is bracing for loss on some of its international routes. “There will be some revenue loss definitely, but we are utilizing these aircraft in other routes," said a senior Air India executive, who asked not to be named.
IndiGo too is bracing for a financial impact. “We will have to see how the outbreak of the coronavirus pans out. With summer approaching, we are hoping for this to be contained as stated by medical experts," said an IndiGo official requesting anonymity.
“If the current epidemic continues and spreads further, the aviation sector could see weak demand. However, low oil prices are a positive. The recent cut of jet fuel by about 10% could bring our fuel costs down by about 4% during the quarter," the official added.
On Monday, Vistara’s chairman Bhaskar Bhat said the Indian aviation industry is bracing for a capacity reduction in international sectors due to the outbreak. The capacity is expected to be redeployed to domestic sectors, Bhat added.
Though domestic operations have largely remained unaffected by the spread of the virus, the Indian aviation industry could see its international traffic growth reduce by at least a fifth if flights to and from South-East Asian countries are completely suspended, said rating agency Icra.
Indian aviation industry could see a maximum impact of 19.5-23.8% on international passenger traffic growth if there is a complete suspension of flights to and from South- East Asian countries including China, which could affect about 4.5-5.5 million passengers, Kinjal Shah, vice president, Icra, said in the statement.
“This is negative for the Indian aviation industry, which is already reeling under significant passenger traffic slowdown, with the international traffic growth for the first nine months of fiscal 2020 having witnessed a decline of 8.4%," Shah added.
“We hope that the outbreak of the coronavirus is contained. At present, domestic operations of Indian carriers haven’t been affected much. But, if the virus outbreak persists, it will be difficult for the domestic aviation industry to register a double digit growth in the near future," a senior government official said, requesting anonymity.
Care Ratings said India received 10.9 million foreign tourists in 2019, of which China accounted for about 3.1% and that in the absence of foreign arrivals from China, foreign exchange earnings could take a beating. The government has temporarily suspended e-visas to Chinese nationals and others residing in China.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!