The credit profile of most of the Indian airlines will remain stressed for now, with more and more countries expected to extend their ban on travel from India in the face of the unabated Covid-19 crisis in the country, aviation experts say.
The hopes of Indian carriers for an early revival of international flight operations fizzled out after the move on Tuesday by the UAE civil aviation authorities to further extend the ban on arrivals from India.
“While India is nowhere near seeing through this current wave of cases, infections and deaths, it’s only prudent that the UAE halt flights so as not to damage their own progress on vaccinations and controlling the virus,” Saj Ahmed, chief analyst with the London-based StrategicAero Research, told Arabian Business.
On Wednesday India registered 382,315 new cases and 3,780 Covid-related fatalities amid reports of a slowdown in PCR tests administered in many states.
The General Authority of Civil Aviation and the National Emergency Crisis and Disasters Management Authority announced on Tuesday the extension of the suspension of entry for travellers from India on all flights on national and foreign carriers without giving a date from which travellers would be allowed to enter again.
“It’s more likely that this ban [by the UAE] will not be lifted until India turns the tide on managing the pandemic,” Ahmed said.
“This will financially wound Indian airlines which have limited flight options to redeploy capacity, while the UAE airlines still can focus on other markets like Iran, Pakistan, the GCC and beyond.
Saj Ahmed, chief analyst with the London-based StrategicAero Research
“Until India gets a grip on the pandemic, airlines there are simply going to struggle financially for a considerable time,” Ahmed said.
International travel from India has been impacted since the cessation of scheduled international operations from March 23, 2020.
While limited operations are being undertaken under the Vande Bharat Mission and air transport bubble arrangements, in recent weeks travel restrictions have been put in place by several countries as India struggles to control the second wave of Covid-19.
“These [latest round of] flight bans on international routes will continue to weigh on the recovery prospects [of the Indian carriers],” Kinjal Shah, aviation sector analyst and vice president – corporate sector ratings at rating agency ICRA, told Arabian Business.
“The credit profile of most of the Indian carriers continues to be characterised by weak liquidity positions. In the near term, the credit profile of Indian carriers will remain stressed,” Shah said.
“ICRA has always maintained that the impact of the pandemic will last longer on international travel than domestic travel,” Shah said.
Countries such as Canada, the UK, the US, New Zealand, France, Australia, Singapore, Hong Kong and Oman have either banned or put restrictions on flights from and to India currently.
The UAE has suspended flights from India from April 24 but allowed transportation of passengers from the country to India by both Indian and international carriers.
Major Indian airlines like Air India, Air India Express and IndiGo, which have a considerable international network, now expect a delay in recovery of international flights, which typically bring in higher yields than domestic flights.
Sector experts said domestic passenger traffic for the Indian carriers is also subdued currently due to impact on both business and leisure travel.
The current turbulence in the aviation sector in the wake of the second Covid-19 wave has also impacted the Indian government’s much delayed plans to privatise its national carrier Air India.
Tuhin Kanta Pandey, secretary of the department of investment and public asset management (DIPAM), told an audience last week that the privatisation process for Air India could be delayed by a few months due to the ongoing pandemic and also due to processes like physical inspection of assets by potential bidders.
Pandey said that the government was earlier targeting the completion of Air India divestment process before the first half of 2022 financial year.
While none of the Middle East-based airlines evinced any interest in acquiring stake in Air India, Tata Group and SpiceJet’s chairman and managing director Ajay Singh, in his individual capacity, are reported to be in the race to bid for the carrier.
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