Tuesday, March 10, 2020

Coronavirus impact: Long road to recovery for tourism, airline companies

The global outbreak of the novel coronavirus (COVID-19) has dealt a massive blow to the Indian travel and tourism industry, particularly airlines. Since the coronavirus has started spreading, many countries have issued travel advisories on the worst affected geographies, including China, South Korea, Iran and Italy.
Some analysts fear that the overall economic impact may exceed $1 trillion. International air fares have dropped 30-35% since the outbreak. With little visibility on when the virus will be contained, the estimated revenue loss on passenger business alone could be as high as $113 billion. Global air travel demand growth in January was the slowest monthly increase since April 2010. In India, airlines and tourism sector representatives have rushed to the government seeking financial support.

Average one way fares to routes including Mumbai-Singapore, Bangalore-Dubai and Delhi-Dubai have fallen between 41-46% month-on-month in March, data collated by the travel platform Ixigo showed. India’s largest airline, IndiGo’s fare for Mumbai-Singapore flights dropped to Rs 9,051 in March, compared with Rs 13,720 in February and Rs 10,303 during March 2019. Meanwhile, IndiGo’s Delhi-Dubai fares fell 47.4% year-on-year (y-o-y) to Rs 9,072 in March 2020. In February, the fare on the same route was Rs 15,125. Air India and Vistara have seen a 26% y-o-y drop in sales (on billing-and-settlement-plan basis) on international routes in February, a senior airline executive told FE. “Selectively just for bookings to South East Asia and West Asia the impact is more severe, over 50%,” the source said.

West Asian airlines have taken a significant hit. Dubai-based Emirates also saw a 17.4% y-o-y fall in fares on the Delhi-Dubai route to Rs 10,606 in March. “Around 80% of Emirates’ network is on hold… we expect a revenue loss of around $4 billion. Their operating cost would go up by around 18% y-o-y in the following year,” said Mark Martin, aviation consultant. Global air travel demand growth (measured in total revenue passenger kilometers) slowed to 2.4% year-on-year (y-o-y) in January 2020, compared with 4.6% y-o-y growth last January, said International Air Transport Association (IATA).
10/03/20 Anwesha Ganguly/Financial Express
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