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Business News/ Companies / International flight resumption offers respite to airlines
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International flight resumption offers respite to airlines

The move will also likely offer relief to passengers from higher airfares

Shares of IndiGo and Spicejet rose after the government announced its decision on Tuesday. IndiGo gained about 12% till Thursday, while SpiceJet rose about 7%.Premium
Shares of IndiGo and Spicejet rose after the government announced its decision on Tuesday. IndiGo gained about 12% till Thursday, while SpiceJet rose about 7%.

NEW DELHI : India’s decision to restart scheduled international flights after nearly two years will offer a major respite to homegrown carriers at a time when their operating costs have soared due to high oil prices.

The move will also likely offer relief to passengers from higher airfares with airlines adding more flights across their networks, partially offsetting some drawbacks facing the sector due to surging oil prices and restricted airspace owing to the conflict between Russia and Ukraine.

The government’s move will open up revenue opportunities for airlines, a senior official at a Gurugram-based airline said, speaking on condition of anonymity.

“Passengers will now have a lot more choices for travel. The pent-up demand, especially for international travel, would also help airlines utilize their capacity and bring in additional revenue," the official said. “On the airfares front, fares on popular international routes will be lower than ones under air bubble flights, but considering the high crude oil prices, it will be higher than pre-pandemic levels," the official added.

India suspended scheduled international flights on 23 March 2020 due to the pandemic. However, flights with some countries continued to operate in limited capacity under bilateral air bubble agreements. India currently has such agreements with 37 countries, including Canada, France, Germany, Japan, Singapore, the United Arab Emirates (UAE), UK, and US.

Capacity restrictions on international flights will be done away from 27 March as various stakeholders, including the civil aviation ministry and the Directorate General of Civil Aviation (DGCA), prepare the summer schedule for international flights for 2022.

“We welcome the government’s decision to allow resumption of scheduled commercial international flight operations from India. This step will provide impetus to the economic recovery for the sector and the nation, with borders opening for tourists," IndiGo’s chief executive Ronojoy Dutta said in a statement. “We will soon be announcing the schedule for our international destinations, in accordance with these new guidelines," he added.

IndiGo (Interglobe Aviation Ltd), India’s largest domestic airline carrying nearly one in every two passengers, will seek to expand its presence in the international markets amid competition from Tata group-operated Air India, and Vistara, among other airlines.

IndiGo, which has a fleet of about 283 planes, hopes to fly mid-haul destinations to Eastern Europe, Western Europe, the Far East, and other parts of the world in the coming months. Among these are about 54 Airbus A321 XLR (extra-long range) aircraft capable of flying to destinations three and seven hours away. IndiGo has orders for 386 A321 XLR aircraft.

Shares of IndiGo and Spicejet Ltd—the two listed carriers—rose since the government announced its decision on Tuesday. IndiGo gained about 12% till Thursday, while SpiceJet rose about 7%.

The International Air Transport Association (IATA), comprising more than 290 airline members, welcomed India’s decision to normalize international air travel.

“This will support the recovery of the aviation and travel sectors, the economy as a whole, and satisfy the demand for air travel," said Amitabh Khosla, India Country Director at IATA.

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ABOUT THE AUTHOR
Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 10 Mar 2022, 03:46 PM IST
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