Friday, February 07, 2020

Indigo, Air India's cancellation of China flights for 30 days could cost upwards of Rs 25 crore

Bengaluru: Indian Airlines cancelling flights to China in the wake of the coronavirus epidemic for the next 30 days could be costing them upwards of Rs 25 crore, said sources.

While these are rough estimates, the actual revenue loss could be much higher or lower depending on a variety of factors, said insurance sources.
Both, Air India --which has now suspended its Delhi-Hong Kong and Delhi-Shanghai till March 28, 2020 -- and Indigo, which has cancelled its three dailies to China, have covers with New India and the three other public-sector general insurers. New India is the leader underwriter for the policies, said sources.

SpiceJet is continuing its Delhi-Hong Kong flight.

The sum insured, sources said is $1.5 billion in coverage for a range of liabilities including third-party, baggage claim, passenger, cargo, hanger and airmail liability.

While flight cancellations and refunds to customers will be paid by insurers, the overall loss of revenue for the airline from the China shutdowns will be not covered. “No airline in India has taken a loss of profit cover. This cover would have provided for business interruptions, loss of earning power from unforseen events such as the Coronavirus global health emergency,” said an insurance official.
06/02/20 Rachel Chitra/Times of India
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