Airlines on a wing and prayer with tepid demand for tickets

Domestic airlines, which restarted operations last week, are seeing tepid demand for tickets. While most airlines are getting bookings for half the operational capacity, majority of passengers are taking one-way tickets.

Passenger load factor

An IndiGo official confirmed that the passenger load factor (PLF) on average is a little over 50 per cent for the airline. A source at Vistara said that PLF is not more than 40 to 50 per cent on average. “Some routes in the North East, Patna, and Kolkatta seem to be doing well for us, with more than half of the flights being full; however, some destinations in the south such as Bengaluru have hardly 10 to 15 passengers at the moment,”said the source from Vistara.

Balu Ramachandran, Senior Vice-President, Cleartrip, said that since the lockdown has been lifted, nearly 95 per cent of the bookings are for one-way travel, indicating that most travel is from customers stranded during the lockdown and now seeking to get back home.

Among the domestic airlines, IndiGo received the highest number of bookings, according to data provided by online travel agents. Data from Thomas Cook India showed that ever since the lockdown has been eased, IndiGo has received the largest share of bookings at 54 per cent, followed by SpiceJet, Vistara, and GoAir.

According to data from Ixigo, Thomas Cook India, and EaseMyTrip, while demand is higher for tickets to cities such as Delhi, Bengaluru, Chennai, Coimbatore, Hyderabad and Kolkata, non-metro cities such as Nagpur, Ahmedabad, Vadadora, Jaipur, Patna, Chandigarh, and Kochi have also seen some uptake.

Airfares ‘reasonable’

But airfares have been at reasonable levels so far, in line with the government’s announcement to temporarily cap tariffs.

For example, a New Delhi-Mumbai flight ticket would cost between ₹6,000 and ₹7,000 between May 25 and May 31. This 9.5 per cent lower than the fare prior to the lockdown, according to Ixigo.

However, some routes such as Mumbai-Ahmedabad, Mumbai-Kolkata, and Bengaluru-Chennai have seen an uptick of 17.7 per cent, 9.09 per cent and 10.3 per cent, respectively.

According to the source in Vistara, the higher prices in these sectors could possibly be a reflection of the low passenger load factors on these routes. “At least the costs of operations need to be recovered, else the airline will have to end up cancelling the flights,” said the official.

The tickets are also being booked way closer to the date of travel to avoid cancellations.

Data from EaseMyTrip showed that 89 per cent of the bookings are being made within 72 hours before the date of travel, where as Thomas Cook India said that “maximum bookings have been received not earlier than 7 days prior to departure”.

Thomas Cook Indiasaid that given that commercial operations have started to resume operations gradually in a few cities, a clear indicator of India getting back to business.

But it will be a while before airlines can resume full-fledged operations. As per an ICRA note, passenger traffic at airports will remain under pressure for the first half of FY21, with some recovery likely only in the second half. On a full-year basis, passenger traffic is estimated to decline by 45 per cent to 50 per cent in FY21. Traffic recovery, in a meaningful manner, is expected towards FY22, and passenger traffic levels of 345 million in FY19 may be surpassed only by FY23.

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