IndiGo, SpiceJet Face Turbulence As Coronavirus Hits Foreign Travel

Occupancy is expected to fall for domestic airlines as Indians cut back international travel amid the new coronavirus outbreak.

Tracking the global trend, passenger load factor, or the percentage of seats filled, is likely to fall for most international flights for InterGlobe Aviation Ltd., the operator of India’s largest carrier IndiGo, and SpiceJet Ltd. as virus cases rise, including in India. Shares of the two airlines have tumbled 16-25 percent in the last one month because of a dip in flight ticket bookings, especially to Southeast Asia.

International operations of the two carriers are expected to contribute nearly a fourth to their overall capacity in March, according to data compiled from RDC Aviation, a U.K.-based aviation analysis company.

While IndiGo has deployed 24.1 percent of its total capacity on international routes, it intends to increase this to 28 percent for its April-September 2020 summer schedule. Most of this will be deployed to the Middle East—the United Arab Emirates, Qatar and Saudi Arabia.

Around 25.3 percent of Spicejet’s fleet caters to international routes and this is expected to remain stable during the summer. The budget carrier has deployed most of its international capacity to Saudi Arabia, Thailand and the U.A.E.

Both the airlines have been placing higher share of incremental capacity on international routes due to the slowdown in the domestic market. The expected dip in capacity utilisation on overseas routes is likely to weigh on ticket prices, which are already reeling under pressure due to cheaper fares in the domestic market.

Bookings Fall

Tourists are wary of making fresh bookings to the virus-affected locations and airfares to these destinations have dropped 20-30 percent, said Sabina Chopra, co-founder and chief operating officer, corporate travel at Yatra.com. “Southeast Asia and Italy being the two most preferred destinations for Indians, we can anticipate a drop of about 20-25 percent in terms of future bookings, though it is too early to predict any drastic impact.”

A spokesperson for India’s largest online travel portal MakeMyTrip said flight bookings for Southeast Asian countries have been significantly impacted. But countries in the West, including the U.S. and Europe, are seeing a marginal dip, he said. For domestic travel, however, there hasn’t been any noticeable dip so far.

Yatra.com said it has received about 35 percent cancellation queries from travellers who had planned their trips to foreign locations during the holiday season.

BloombergQuint’s emailed queries to IndiGo and SpiceJet remained unanswered.