Impact of Coronavirus on Indian Airlines.

Domestic airlines will see a marginal impact on their revenue due to the corona virus crisis because of limited presence in East Asia, but will gain from the drop in crude oil prices and possible reduction in aircraft lease rentals, Air India, Indigo and Spice Jet have suspended flights to China and Hong Kong. Loads to Singapore and Bangkok have declined as customers cancel or postpone their trips.


Experts say that the outbreak will not negatively impact airlines in India. Willy Boulter, Chief commercial officer, Indigo said that the “flights to china that we have suspended so far accounts for less than 1 percent of our capacity. While we are seeing weaker demand to and from South East Asia, our flights are still operating as normal, except in Vietnam where we have reduced from two flights per day to one from March1. The total impact will be around 2 percent of capacity “


Spice Jet, too does not see the crisis hurting its operation and in market sense they sees a opportunity to lease more planes as airlines in East Asia which have grounded planes and reduced the number of flights. Crude oil price has declined 17 per cent in a month and was trading at $57 on February 14. Fuel accounts for over 30 percent of airlines expense and this would result in lower costs.

Kiran Koteshwar, Chief Financial officer, Spice jet said:”Globally, aviation is impacted as Chinese are big travellers. But the impact on us is less as we have limited exposure to East Asia. There is no impact on travel demand to and from West Asia, on the positive side; there is an opportunity to lease planes at lower rates. We are looking to add two Boeing 737s“. 

 
The international Civil Aviation Organization has estimated that global airline revenue could fall by $4-5 billion in the first quarter. The growing scale of Corona virus outbreak poses significant challenges to Singapore Airlines along with that Vietnam Airlines has said it is losing $10 million in revenue per week due to flight cancellations.

Aviation consultancy CAPAs South Asia CEO Kapil Kaul said that “On the cost side Indian Airlines can benefit due to fall in crude oil price. Demand to East Asia and Southeast Asia will be impacted depending upon the severity of the situation in the next few weeks. There could be an impact on India’s outbound travel from April if the Situation remains risk driven. The outbreak is unlikely to impact Indian carriers significantly at this stage except Air India, which has significant operations to East Asia.