Coronavirus Impact: Airlines asked to waive cancellation charges

March 15, 2020 12:50 PM

Airlines across the globe have been severely hit by the pandemic, and the resultant closing of international borders.

The move will deal a blow to airlines already reeling from the COVID-19 impact, analysts said.The move will deal a blow to airlines already reeling from the COVID-19 impact, analysts said. (Representative image)

By Anwesha Ganguly

Stranded passengers, who cannot travel following the advisory issued by the government, needn’t worry as they will be able to get full refunds for cancellations and will not have to pay rescheduling charges. In the wake of the coronavirus outbreak, the Directorate General of Civil Aviation (DGCA) has asked domestic airlines to waive cancellation and rescheduling charges. “In the current scenario, it would be appropriate if airlines support their passengers in this tough time by waiving off cancellation and reschedule charges or by providing any other incentive,” the regulator said.

The move will deal a blow to airlines already reeling from the COVID-19 impact, analysts said.

Online travel operators are now seeing increasing disruptions in domestic travel due to cancellations primarily in metros. “There has been an impact on immediate travel to tier-1 cities that have higher number of infections. On the other hand, lower airfares have also stimulated travel to destinations that are unaffected by coronavirus. We have seen an increase in search queries for summer travel to destinations like Shimla, Chandigarh, Varanasi, Bhubaneshwar, Jaipur, Amritsar and Calicut. Train users are also shifting to flights due to lower airfares which is helping balance the overall dip in demand,” Aloke Bajpai, co-founder and CEO, Ixigo told FE.

Passengers are also facing the brunt of curtailed flight schedules due to the COVID-19 outbreak. The DGCA has asked airlines to consider and take an appropriate call “in light of the hardships faced by passengers,” due to this disruption. Analysts said the decision to waive these charges will further eat into the airlines’ revenues. “This will have a significant impact. Typically, airlines earn about 70% of the fare value from customer cancellations and rescheduling. With the waivers, this revenue will be lost. The domestic airlines closing in financial year 2019-20 will be bad, and the recovery will take up to one and a half years,” Mark Martin, aviation consultant, told FE. An Indian tourism body has pegged the losses for the industry on account of the travel curbs in India at Rs 8,500 crore.

Airlines across the globe have been severely hit by the pandemic, and the resultant closing of international borders. Earlier this week, India suspended all tourist visas till April 19. India’s largest airline IndiGo has seen bookings drop by 15-20% week-on-week over the past several days on account of the disruptions, which will have a material impact on its earnings. Meanwhile, average airfares for international travel have dropped around 35-40%. Domestic air fares, specifically to metros, have also fallen 15-30% year-on-year (y-o-y) in March, data from travel aggregator Ixigo showed. Jaipur-New Delhi fare is down 29.2% in March 2020.

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