Cash-strapped airlines in India are worried about a likely fall in demand as more Covid-19 infections emerge in the country, potentially dampening appetite for air travel.
Considering that many cases were detected only in March, a decline in traffic in the coming months remains a possibility if the epidemic is not contained soon.
“Aviation is one of the sectors most hit by the likely demand slowdown based on the ramifications of nCoV (Covid-19),” said a 5 March ICICI Securities report on listed Indian airlines. “However, lower crude prices and possible adjusting of frequencies to maintain PLFs (passenger load factor) are two available offsets,” it added.
Brent crude price stood at $51.21 a barrel on Thursday, down 22% from a year ago.
“I don’t think that the domestic demand during January and February was in any way affected due to the outbreak of Covid-19,” a senior executive at a Gurugram-based low-fare airline said. “But with several cases being reported during March, we are cautious about future,” the official added on condition of anonymity.
Most Indian airlines are likely to end the fiscal year with losses due to high costs and pricing pressures. Though cheaper fuel could provide some respite, the widening epidemic could slacken demand.