Indian aviation sector outlook remains ‘negative’ amid coronavirus outbreak: Report

The outlook for India’s aviation industry remains “negative” in the wake of coronavirus outbreak, which has resulted in many international passengers cancelling their travel to South East Asian countries, according to rating agency Icra.

More than 81,000 people have been infected and over 2,700 people have died due to coronavirus. China is the epicentre of the virus outbreak.  Icra noted that the outbreak has impacted travel to and from China as well as other South East Asian countries.

“The suspension of flights on the India-China sector will not result in any significant impact on the financial performance of the airlines, unless the lockout is prolonged, as the traffic on these routes account for only 0.9-1.3 per cent of the total international passenger numbers.” Icra said on Thursday.

However, the agency said the impact is expected to be severe if passengers from other South East Asian countries, hit by coronavirus, cancel their travel. Traffic from these countries account for around 19.5-23.8 per cent of the total international passengers flying to and from India, it noted.

The extent of impact of the flight/ ticket cancellations on the profitability of the domestic airlines would, however, vary depending on the airlines’ presence in these routes.

In a note, the agency said it has “maintained its negative outlook on the Indian aviation industry in view of the ongoing lockouts in parts of China following the outbreak of the coronavirus”. Some airlines have already discontinued flights to China and Hong Kong until June 2020.

Air India has temporarily stopped flying to China and Hong Kong till June 30. The airline has also reduced the number of flights to Singapore.

Vistara has decided to cancel 54 flights to Singapore and Bangkok in March. GoAir has suspended its operations to Singapore and has also scaled down the number of flights operated to Phuket and Bangkok.

Among other carriers, Singapore Airlines has extended suspension of flights across its network, including India, till end of May. However, Icra said decline in jet fuel prices would partly compensate airlines’ loss of revenues due to flight cancellations.

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