Third wave of Omicron variant likely to affect Indian carriers

Can the coronaviruses cause a third wave of the Omicron variant to affect Indian carriers? Domestic operations are likely to remain unaffected with some impact only visible on international operations that are still suspended, according to industry insiders.

The total passengers carried by domestic airlines from January to October 2021 were over 6.20 crore as a result of the data released by the Aviation regulators Directorate General of Civil Aviation DGCA, compared to over 4.93 crores in YoY comparison. This led to a growth of 25.88 per cent YoY and 70.46 per cent MoM.

After the government suspended a capacity cap on domestic flights in May 2020 after a two-month countrywide lock-down, scheduled carriers were allowed to operate up to 100 percent of their pre-COVID 19 capacity on domestic routes.

Industry analysts and insiders don't see the Omicron as being a variant of concern by WHO since its discovery in November by South African scientists in November.

It is still early days and it's time to wait and watch. The maximum impact will be on international travel if there is a spike in the number of cases. Domestic travel will be impacted in a much lesser way and we don't see much of a pullback there. Jagannarayan Padmanabhan, practice leader director transport logistics, CRISIL Infrastructure Advisory, said there was a curtailment on the number of flights on domestic routes during the first wave, but operations continued unabated.

The domestic aviation market has shown a strong recovery in the past two quarters, according to an industry insider who has not been told of the condition of anonymity. Flight bookings for December and January are good and healthy with fares on many sectors showing brisk demand. After a rough 18 months, the whole industry has been waiting for it. If the new variant is found to be serious, it may lead to tighter controls on air travel. The impact assessment needs to be done by the government. The financial loss to Indian carriers was approximately Rs 19,000 crore in FY 2020 -- 21, while the case of Indian airports was approximately Rs 3,400 crore, Minister of State for Civil Aviation, VK Singh, informed Parliament during the monsoon session in August. Domestic air passenger traffic decreased by 0.3 per cent in 2019 - 20 and by 61.7 per cent in 2021 due to the Pandemic.

The threat of Omicrons is large at a time when there is much activity in the sector.

In October, the government inked a share purchase agreement with Tata Sons for the sale of the beleaguered national carrier Air India. There is much excitement in the industry around the launch of share market bull Rakesh Jhunjhunwala promoted Akasa Air and the revival of Jet Airways. The airline was in talks with Boeing and Airbus on Tuesday over the purchase of more than 100 narrow-body planes, according to reports that the airline's shares rose by 5.6 per cent.

The performance of airline companies listed on Indian bourses has been mixed bag. In the January-December period, shares of InterGlobe Aviation, operator of the country's largest passenger airline by market share, IndiGo, have gained 10 per cent year-to-date while those of the second-largest player by market share, SpiceJet, were down 23 per cent year-to-date.

Arun Kumar Singh, CEO of IndiaOne Air, declared that there was not much impact domestically due to the nationwide vaccination drive and the prevailing healthcare regulations in the country. The central government has kept the situation under tight watch. If a third wave of the magnitude of the second wave hits, domestically the traffic may dip a bit. Domestic travel is expected to recover to pre-Covid levels by the first quarter of 2022, according to the report. Any turbulence is expected to be temporary.