Wednesday, September 16, 2020

Indian Airline Industry Pins Hope on Upcoming Festive Season but Flyers Hesitant

After a catastrophic spell of over six months, the Indian airline industry is pinning its hopes for a revival with the upcoming festive season starting next month. However, prospective flyers are still unsure whether they would want to take the risk given that the number of positive Covid-19 cases have been soaring across the country. Since the resumption of domestic flights by the Central government in June, passenger demand has not significantly picked up.

Earlier this month, Wolfgang Prock-Schauer, president and chief operating officer of IndiGo said, “We can see a gradual improvement in passenger load factor (PLF). Also, fares are holding on and slightly higher fares and improvement in PLF will lead to an improvement in RASK."

PLF measures the capacity utilization of airlines. On September 2, the Centre had extended the capacity cap of 45 per cent imposed on domestic flights to up to 60 per cent.

"We are expecting the demand will rise as more people would want to travel to their hometowns and to their families in the coming months. Given the current pandemic, people may prefer taking flights as that would reduce the travel time significantly," said a top official who did not wish to be named.

According to a report by aviation consultancy firm CAPA India, the airline industry is expected to report a consolidated loss of USD 6-6.5 billion in the current financial year. The airline industry is one of few industries that saw demand fall by more than 90 per cent within weeks of the global spread of the pandemic in March, Moody's Investors Service said. The strain on the industry's previous fundamentals is (and will continue to be) felt across a broad swath of the global economy well into 2022 and beyond, it added.

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