Covid surge hits air travel, so carriers turn to govt for financial help, lower capacity limit

Barely a month after Vistara, SpiceJet, IndiGo began rebuilding after disastrous 2020, new Covid wave has forced 20-50% drop in bookings.

Representational image of passengers in a Vistara flight | File photo: ANI

New Delhi: The surge in Covid-19 cases in India hit a new high Thursday with over two lakh cases — the highest in a day since the pandemic began last year. And this new wave of infections is proving to be another big hurdle on the road to recovery for India’s beleaguered aviation industry.

ThePrint has learnt from sources in the Ministry of Civil Aviation that airlines have requested it for financial support, but a decision is yet to be taken. Some airlines have also expressed the desire to reduce the capacity limits from 80 per cent to 60 per cent, but there is no consensus on this latter point, sources said.

India’s domestic air traffic had reduced from 10.8 crore passengers between April to December 2019 to three crore in the corresponding period of 2020, while the number of international passengers dropped from 5.21 crore in April-December 2019 to just 55.9 lakh in the same period of 2020. This led to losses of Rs 16,000 crore for Indian carriers, while airports lost approximately Rs 3,000 crore, according to the government’s answer to a question raised in the Lok Sabha.

But now, barely a month after leading airlines like Vistara, SpiceJet and IndiGo had begun rebuilding by expanding their fleet, introducing new routes and hiring more staff, passenger loads have begun to drop again due to the fresh wave of Covid infections.

Several states have announced different kinds of measures like lockdowns, night curfews and mandatory RT-PCR tests within 72 hours of arrival, leading to a drop in air traffic over the last two weeks. Airlines are witnessing a 20-50 per cent drop in bookings.

Usha Padhee, joint secretary, Ministry of Civil Aviation, said: “Passenger load factors are badly impacted and domestic airlines are finding it difficult to maintain their frequency of flights. During peak, we had passenger numbers of 20 lakh per week. Last week, it was 15 lakh passengers per week,”

A Vistara spokesperson confirmed: “Due to a surge in the number of Covid-19 cases and implementation of several measures by various states, we are witnessing a decline in demand and passenger traffic.”

Budget carriers IndiGo and SpiceJet declined to give their comments for this report when approached through calls and messages, and emails respectively, while AirAsia did not respond to calls and messages till the time of publication.

Capacity & fare limits set to continue

Despite the rising number of cases, both capacity limits and fare bands, which were last altered in March 2021, are set to remain constant. This means airlines won’t be able to carry more than 80 per cent of aircraft capacity.

On the idea of capacity adjustment the Vistara spokesperson said: “We are closely monitoring the situation and remain nimble in adjusting capacity, if required. We are hopeful that the situation will improve soon, leading to a return in demand.”

However, according to airline lobby group International Air Transport Association (IATA), low-cost airlines will need to continue flying at 80 per cent occupancy to be profitable.

Even before the new wave of infections, air travel in India had not yet returned to normalcy. International travel is only permitted via the air bubble system with 28 other countries, while domestic flights have capacity limits and fare bands. Sanjeev Kapoor, former chief strategic and commercial officer, Vistara, told ThePrint that the reason 100 per cent passenger traffic did not come back is because people were still afraid of contracting the virus and business travel was still down.

“But now, even more people don’t want to fly. Corporates also will return to work-from-home. Leisure travel, which was bouncing back, will drop off significantly,” Kapoor said, adding fleet expansion, new routes and rehiring will now have to be put on pause.

“There isn’t much the airlines can do to bring back demand till the fear of the second wave subsides. Very importantly, dropping fares won’t bring back demand. At this time, demand isn’t elastic. Airlines should resist the temptation to drop fares — it won’t work and it’s unethical,” Kapoor said, adding that putting capacity limits will not have any tangible effect. “Airlines anyway won’t fly more than the demand,” he said.

However, he added that implementing a fare floor could be useful, because it will help resist dropping prices just to stimulate demand. “Pricing cap is only required when demand is more than supply, which isn’t the case here,” Kapoor explained.

Govt’s new guidelines

Padhee pointed out that the ministry, after detailed deliberations with various stakeholders, has issued revised guidelines for the air passengers, including the actions to be taken by the airlines, airports operators and ground handling agents.

One of these measures is banning on-board meals on flights shorter than two hours. Many have hailed this as an important step, but some argue that it will hit revenue collection.

Kapoor said opposition to the government’s move was “short-sighted”.

“The first job is always to ensure safety. Whatever loss will be incurred here will be made up in the future. No airline is actively communicating that this is good for the passenger’s peace of mind. ‘We have done this because we care. You should travel with more confidence’ — this is the direction airlines should lead with,” the aviation industry veteran said, adding that banning meals on short flights is something that should have been done anyway, but will not impact traffic.

Passenger behaviour and rigid precautions

Kapoor also expressed hope that people’s behaviour will improve because of the new Covid wave.

“If we look at the last few weeks in the US and UK, the drop from the peak was also pretty rapid. People’s behaviour, in terms of mask compliance and social distancing, will also improve now. Hopefully, this makes people realise the severity of the pandemic that has been raging for over a year,” he said.

However, aviation analyst Mark Martin said the priority should be to contain the virus, not ease travel.

“All levels of precautions should be taken to ensure that the virus is contained. This surge has been unprecedented, and this is obviously not something we were expecting. I think the precautions in terms of travelling we are taking aren’t rigid enough. Every step, every measure should be taken to make travel safer,” he told ThePrint.

“We are just scratching the surface in terms of the coronavirus. The challenge we are facing is that we are constantly playing catch up with this virus. Till we figure out how to deal with it, all modes of transport should come to a standstill. The deaths are far higher this time round with the mutant strain,” Martin added.

(Edited by Shreyas Sharma)