Coronavirus scare: daily stocks decreased 15-20% in recent days, says IndiGo
NEW DELHI: It has greatly impacted the travel industry, as airlines face a double hit of reimbursement due to cancellations and a decrease in early reservations. The fall of the rupee is also affecting airlines, since almost 70% of its cost is denominated in dollars, such as lease and maintenance contracts for aircraft, which denies the benefit of low oil prices.
On Wednesday he said in an EEB presentation that “in the last days, week by week, we have seen a 15-20% decrease in our daily reservations…. the numbers could change from here depending on how the situation evolves. We expect our quarterly earnings to be materially affected due to the above. In addition, the rupee has also depreciated sharply, which will have an adverse impact on our dollar-denominated liabilities, mainly because of capitalized operating leases.
“In January and February 2020, IndiGo experienced a modest impact of Coronavirus. We canceled our flights to China and Hong Kong and frequency reduced to certain other Southeast Asian markets. This capacity was redeployed in other markets without having a material impact on our revenues, ”he said, making it clear that the impact became visible since last week.
The same is the story with other Indian carriers, with IndiGo being the only financially strong one and a few who are quickly running out of cash to weather the crown storm.
Another executive at a private operator in India said that while international reserves decreased by almost 20-30%, national reserves also decreased by 5%. “We are seeing the fall in domestic reserves, that is, the cases of corona and other places such as the northeast. This despite the fact that rates are low due to low demand in an attempt to attract flyers, said this official.
A senior official of a leading international airline described Corona as the biggest challenge facing airlines worldwide. “Travel demand has declined due to fear and also the restrictions imposed by several countries, including India, to control the spread of the coronavirus. But we are still operating flights due to the international rule that an airline can lose its airport spaces if it does not use 80% of them. Europe plans to amend this given the unprecedented challenge posed by the survival of the airlines by the crown. India has also been asked to consider relaxing this rule until the crisis is resolved. Once that happens, airline flight cancellations will increase. As of now we are operating many international flights, including those from India, just to retain our slot machines, the official said.
Hotels are also bleeding heavily with travel. Five-star rates in many places have fallen. “The occupations are hit. We do not win in room rentals. Our income comes mainly from guests who send food and drinks and use other facilities. It is becoming a survival problem, since it forgets international cancellations, now even national cancellations have begun to arrive, ”said a leading hotelier.