More Indian airlines could be facing collapse as travel curbs worsen headwinds

Barely a year after the grounding of Jet Airways (India) Ltd, more airlines in India are staring at a potential collapse in the aftermath of the Covid-19 outbreak, according to industry officials.

The pandemic has caused a sudden squeeze in demand for air travel, accentuated by a week-long ban on domestic flights by the government. Though the government has said that the suspension, which starts from Wednesday, would be reviewed on 31 March, it could be extended further as the pandemic is continuing to spread across the country.

Even if the suspension is lifted, the fear of travel that has gripped people in wake of the deadly disease would likely mean planes would fly near empty. “Just as things were looking better, just as fares were beginning to pick up, the Covid-19 pandemic has hit the sector,” said an official with a low-cost carrier, requesting anonymity.

“At present, with all aircraft grounded, airlines are losing money,” the official said, adding that airlines don’t make money when their planes are grounded.

Earnings of domestic carriers were impacted in the December quarter—traditionally considered a robust period for air travel—because of a price war caused by excess capacity and sluggish demand in a slowing economy.

Things began to improve from the start of this year as airlines embraced better pricing discipline, leading to higher fares. But with the outbreak of Covid-19, the scenario has turned grim.

“The chances of everyone emerging unscathed is very low,” said another airline official who spoke on condition of anonymity.

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