Collateral as India quarantines itself: Almost 1 million tourists a month; aviation, hotel slowdown

“We will study passenger loads for the next few days and will decide — on the basis of that — whether or not to cancel flights to foreign destinations,” a senior executive at a domestic airline said. Indian airlines handle nearly one-third of India’s international air traffic every year while foreign airlines carry the rest. According to the official, a chunk of foreign nationals who arrive into India are flown in by overseas carriers.

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The move is also expected to add to the woes of India’s tourism sector, which last year witnessed the slowest growth in foreign tourist arrivals in a decade.

In 2019, about 10.89 million tourists visited India, a growth of 3.1% from the year before. Of these, 1.74 million visited in March and April alone, with the two months representing more than 15% of the annual foreign tourist arrivals. That’s why the visa freeze until April 15 is expected to hit hard.

In addition to airlines, a cascading impact is expected to be seen on allied sectors such as airports and hospitality.

According to official information, in the month of January this year there were 1.12 million foreign tourist arrivals, of whom 795,863 were from Asia and Europe – the regions worst affected by COVID-19.

Another official at a domestic full-service airline told The Indian Express that carriers were yet to decide whether they will offer full-refunds to the impacted foreign passengers or simply offer a free change in their itineraries. “This will be decided once there is a level of certainty as to how long will the suspension of visas extend,” the official said on condition of anonymity.

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“Since international traffic accounts for a considerable share of our traffic, on any other day, we would have redeployed capacity to domestic routes. But the situation on domestic routes is not too good either,” the official said. Sector analysts expect national carrier Air India to be the worst-affected among Indian airlines because of the visa suspension.

According to latest available data, Air India carried 1.80 million international passengers to and from India during April-June 2019.

IndiGo, India’s largest airline which handles nearly half of country’s domestic passengers, said Wednesday that it expects its quarterly earnings to be “materially impacted” because of the virus situation.

The period between mid-March to mid-April, because of exam season, is generally deemed to be the leanest during a year for domestic airlines and the added impact of the COVID-19 outbreak has carriers bracing for impact from plummeting demand, mounting flight cancellations and a consequential grounding of a part of their fleets.

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IndiGo, India’s largest airline which handles nearly half of country’s domestic passengers, said Wednesday that it expects its quarterly earnings to be “materially impacted” because of the virus situation. Experts have also pointed out that usually by this time of the year, people begin booking for summer holidays but that is yet to be seen, something that could potentially impact future loads.

While foreign airlines, too, are yet to take a call on whether their flights will be cancelled or not, it is noteworthy that flight movements of international carriers account for a substantial amount of revenues for airport operators in terms of landing charges, parking fees and other ancillary revenues.

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During 2019, of a total 9.15 million flight movements at Indian airports, 1.58 million were international flight movements. Notably, some foreign airlines including British Airways recently enhanced their capacity allocated to India, after it was freed up due to mass flight cancellations in China.

“This is a bold but a necessary move to prevent a mass pandemic in India. This will have a major impact beyond just aviation and the hospitality sector. Indian carriers will be forced to continue to cancel/temporarily suspend international flights for the time being. Foreign tourist arrival growth, which saw the slowest growth in four years in the first half of calendar 2019, will be severely hit this year as well due to the global economic slowdown. Focusing on the positives, there are still no restrictions/advisories issued on the domestic travel front so, hopefully, this segment will not be impacted as much,” said Aloke Bajpai, CEO and co-founder of online travel portal ixigo.