Moneycontrol PRO
Upcoming Event : LeapToUnicorn - mentoring, networking and fundraising for startups. Register now

Resumption of international flights: What's in store for Indian airlines 

Tourists have been flocking to every possible place which is open for business. This could well be replicated across the country as more international tourists are attracted.

March 09, 2022 / 07:08 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

In a not so surprising announcement, the Ministry of Civil Aviation has allowed resumption of scheduled commercial international services starting March 27, 2022. The date coincides with the start of Summer schedule. The services were initially planned for resumption in mid-December last year, but the onset of Omicron variant induced a third wave and restrictions returning across countries led to the government pushing the plan indefinitely.

But as the wave subsides in the country, the government has been swift. First, the Ministry of Health and Family Welfare (MoHFW) listed out 82 countries which have reciprocal arrangements to accept vaccination. This was followed up with new rules starting February 14, 2022 which does not mandate home quarantine for international arrivals but just self-monitoring! The requirement for a negative RT-PCR has also been done away with if a person is fully vaccinated. World over, governments are looking at ways to kick start the economy and the speed of decision making has been faster than what it was during the previous waves of COVID.

What does it mean for the airlines?

IndiGo

While the airline has always talked about grand plans internationally, only 8.83 percent of its total scheduled departures were international in 2019 - the last full year of operations before pandemic. Yet the very nature of international operations is such that this translated to 21.35 percent of capacity by ASK (Available Seat Kilometres).

While IndiGo may not be able to restart its entire international portfolio this early, its eastern hub with focus on religious tourism, codeshare with Turkish, Air France - KLM and American Airlines will give it a shot in the arm. This will open up the lucrative foreign currency ticket sales which will matter at times when rupee is sliding, oil is nearing an all-time high and passenger traffic isn’t yet back at pre-COVID levels.

SpiceJet

Many expected the airline to go down in COVID, but it has been resilient and while it may still not be standing tall, it hasn’t exactly gone down either! SpiceJet did not have a risky network in the past on the international side. With nearly a quarter of the capacity by ASK deployed on International sectors, the percentage is likely to go further up if it returns to most of its international flights, since it has reduced its domestic presence in winter schedule.

The airline had made big bang announcements, starting with a codeshare with Emirates and a hub at Ras Al Khaimah - none of which had materialised pre-pandemic. The next few months will set the tone if those announcements are likely to see the light of the day or have been a hogwash.

Air India and Air India Express

From pre-pandemic to now, the airline has a new owner after successful privatisation. If there is an airline that could take a hit, it would be this one. Air India had 69.9 percent of its capacity by ASK deployed on International routes. These amounted to 25.6 percent of its total departures.

From relief flights to flights under Vande Bharat Mission (VBM), Air India and Air India Express either had monopoly and exclusivity or had the lion’s share. Lack of competition, rules favouring non-stop flights and highest capacity deployment has meant that the airline made the best of the situation. But that run may come to an end, as passengers have more choice to book and the Middle Eastern carriers return with full swing to India.

Vistara

The airline started wide body international operations in the pandemic. Its international operations have been riddled with challenges. The pandemic led to a global shutdown immediately after it received its first 787. Now that the world is opening up and it may want to expand, the issues with 787s mean that the airline has not been able to take deliveries of its aircraft!

GoFIRST

The smallest of the lot has had limited presence on international routes. The airline had invested in a sales network and was looking to scale up before the pandemic. The airline which had plans of an IPO could look at some sort of differentiation with the route network - like it had in the past to attract passengers.

Wider impact on tourism and business

The air, travel and hospitality ecosystem has been the worst hit due to the pandemic and in the case of India where there wasn’t a direct bailout, the challenges were more than ever. Last quarter has seen both IndiGo and SpiceJet clock profits. Coupled with profits and data from hospitality chains which are listed, it has been established that revenge tourism is for real.

Tourists have been flocking to every possible place which is open for business. The rush to reach Maldives when it opened saw swift business for both airlines and hotels. This could well be replicated across the country as more international tourists are attracted.

This, though, comes on the backdrop of rising oil, falling rupee and a raging war!
Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Mar 8, 2022 05:50 pm