India's airline industry is particularly vulnerable to any downturn. A 40-50 per cent demand dip could lead to as many as 150 aircraft being grounded. File picture of Air India jets at Indira Gandhi International Airport in New Delhi. Image Credit: AP

Mumbai: India's largest carrier IndiGo has grounded about 16 planes of its total fleet of 260 aircraft and is asking the employees to take 10-20 per cent salary cuts as it grapples with the impact of coronavirus on domestic and international flights.

"Governments across the globe have issued travel advisories which have resulted in a virtual shutdown of all our international flights," said an airline official. "Domestic bookings too are down around 20 per cent and it is not clear that the situation will not get worse before it gets better.

"With the precipitous drop in revenues, the very survival of airline industry is at stake. We know how hard it is for families to take a cut in take-home pay. But unfortunately, it is impossible for our company to fly through this economic storm without all of us making some sacrifice."

IndiGo has seen traffic slump as much as 30 per cent in India, while its international flights have dried up following government restrictions on travel.

Meanwhile, according to Bloomberg, Vistara, the Indian venture of Singapore Airlines Ltd., is considering delaying delivery of some of the first batch of Boeing Co. 787 Dreamliners it has on order.

Should the pair go ahead with the flight cancellations, they’d join the growing number of airlines around the world doing so - United Airlines Holdings Inc. and British Airways’s parent recently announced capacity cuts - as the pandemic keeps people from flying. Indian carriers have avoided major reductions in flights so far but pressure is mounting as the number of confirmed cases climbs in the world’s second-most populous country.

More on the way

With demand expected to fall at least 40-50 per cent in the near term, India’s airlines may initially ground 150 aircraft, according to Sydney-based CAPA Centre for Aviation. Even after a slump oil prices, the country’s airlines will lose $500 million to $600 million this quarter, excluding loss-making national carrier Air India Ltd., and that estimate may be revised downward.

“In the absence of a serious and meaningful government intervention, such an outcome could lead to several Indian airlines shutting down operations by May or June due to a lack of cash,” CAPA India said in a report. “Regardless of any fiscal concessions and support that the government may offer, most airlines will have to shrink their operations, and the more vulnerable carriers may shutdown.”

Need time to decide

Both IndiGo and Vistara have yet to make final decisions on their plans to combat plummeting demand, sources said.

Vistara will temporarily suspend all international flights until March 31, it said in a statement late on Wednesday. The airline has also adjusted its domestic capacity for March and April due to falling demand, and may make further adjustments, according to the statement.

Go Airlines India Ltd. also canceled several domestic flights on Wednesday after suspending international routes, airport websites showed.

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IndiGo is Asia's biggest budget carrier in terms of market value. Image Credit: IANS
From sky-high levels to being grounded
Air-passenger traffic in India, one of the world’s fastest-growing aviation markets, rose 9 per cent in February. While travel restrictions were being imposed elsewhere, particularly around China, India was largely unaffected last month, before the recent sharp escalation in travel bans globally.