Robust demand for air travel spells relief for domestic airlines

Airlines are flying at near capacity after India reopened its skies for local travel after more than two months, belying expectations that fear of coronavirus infections will prompt people to skip flights.

Flights of IndiGo, the country’s largest airline, are operating at capacity with overbooking in many sectors, according to the latest passenger load data of the airline. GoAir, which resumed operation from 1 June, has reported 70-80% average passenger load factor across sectors and nearly 100% to destinations such as Lucknow and Varanasi.

“(IndiGo) flights to and from most metros had near full bookings. Patna, Bhubaneswar, Ranchi, Cochin appear to enjoy steady flow of passengers. Some sectors even saw overbooking. The trends show that the fear and apprehension have slowly dissipated as travellers learn to live with the virus," said an aviation industry executive, seeking anonymity.

Robust demand for travel has come as a relief for airlines that have suffered the most during the two-month lockdown. It will also provide some respite to banks that have offered loans to airlines.

India suspended all flights from 25 March when the government first imposed a nationwide lockdown to contain covid-19. Local air travel resumed across all major cities from 25 May. Airlines are permitted to operate at up to 33% of the earlier approved summer flights schedule for 2020.

"Our bookings data shows there is a rise in travel from non-metros to metros as offices resume operations. Bookings across key routes in June have increased by 45-50% as compared to May last week when domestic flights had just reopened. Airfares have also decreased 20-25% week-on-week, making flying an attractive option for all travellers planning their immediate trips," said Aloke Bajpai, chief executive officer and co-founder of Ixigo.

Data from Ixigo showed bookings in the Delhi-Mumbai, Delhi-Bengaluru, Mumbai-Ahmedabad and Mumbai-Kolkata routes have gone up 22-30% in the first week of June, compared with the last week of May. In certain sectors, the jump has been sharper, with Lucknow-Chennai witnessing a sixfold increase and Lucknow-Kolkata reporting a nearly fourfold rise during the period.

Mint reported on 5 June that traffic congestion, power generation, port activity, vehicle registration and other high-frequency data point to the economy perking up as India reopens, recovering from a devastating slump as factories went idle and people were ordered to stay at home amid the pandemic.

“It has been a good restart of operations," said a GoAir spokesperson.

Queries emailed to spokespersons for IndiGo and SpiceJet on Wednesday weren’t answered till the time of publishing this story.

“The flight loads a fortnight into the opening of domestic travel has been near robust. The Airbus A320 comprising the lion’s share of the IndiGo fleet has a max capacity of 180 or 186 depending on configuration. The average loads on this fleet were about 128," said an aviation industry executive cited above.

IndiGo, India’s largest domestic airline, has 262 aircraft in its fleet. This includes 123 Airbus A320neos, 100 A320neos, 14 A321neo and 25 ATRs.

Airlines had expressed apprehension about low passenger loads after an initial rush as India lifted the ban on air travel.

Civil aviation minister Hardeep Puri said in a tweet on Wednesday that operations of domestic airlines were “smooth and steady".

To be sure, the problems for Indian airlines are far from over as they are operating at a fraction of their fleet capacity. The Indian aviation industry may require funding of up to ₹35,000 crore till 2022-23 as profitability will take a hit due to sharp drop in revenues and high fixed costs during the lockdown period, credit rating agency ICRA said recently.

Source: https://www.livemint.com/

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