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Ashwini Phadnis

New Delhi, Oct. 10 It will be a harsh winter for the airline industry. The slowdown in the global economy could impact both domestic and international airlines flying on several international routes. Both segments – leisure flyers and corporate travellers – are likely to be affected. “With fund managers who fly to financial capitals such as Hong Kong, Tokyo, London and New York having little or no funds to manage any longer, there is likely to be a cutback on travel. Similarly, with the average traveller having lost money on the bourses, the leisure segment market is also likely to be impacted,” said a senior official with a South East Asian airline.

An official of a major European carrier pointed out that while the situation had worsened in the last two-three weeks, there has been a steady decline in travel from India to major destinations in the US and Europe since May.

“From this summer, the larger Indian companies have been putting restrictions on travel, which saw less off take of tickets at higher prices, something that was not happening earlier,” the official pointed out.

With product sales dipping, several companies have cut back on ‘incentive’ trips abroad to several nearby destinations in South East Asia, including Bangkok, Singapore, and Malaysia.

Industry watchers feel that the drop in disposable incomes and fear of job losses, specially in the West, could see fewer people coming to India.

“NRI and Visiting Friends and Relatives segments of the market, comprising people who generally travel to India during the winter months, may push back their plans fearing that they may not have jobs when they return after their vacation. This is bound to affect almost all airlines operating on these routes,” a senior official of an Indian airline with operations to both the US and Europe told Business Line.

This is, however, contested by several international airlines operating here from South East Asia and Europe who say that passenger bookings on flights to India are high even for the peak winter season, although the passenger bookings out of India during that period tell a rather dismal story.

The impact of the slowdown is likely to be felt for the next three-to-six months and to overcome the crisis some airlines could look at cutting down the frequency of flights as also operating smaller aircraft on routes to India.

However, for the passengers, there is a silver lining in this time of gloom. Several airlines are now openly talking about a price war breaking out on several international routes from India.

“The basic fares on several routes from India look set to dip as airlines will resort to any measure to fill their seats. While it will not be something like the fly-for-free or for Rs 1 offer of domestic airlines, some operators could look at offering the basic fare at prices which just about cover the fuel cost of the route. The passengers will still have to pay the fuel surcharge and other charges which will make the fare slightly more expensive, but much less than what is being paid at present,” said an official of a major European airline.

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