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Coronavirus cripples tourism sector; airlines, hotels worst hit

Mass-scale cancellations of travel bookings, including air travel and hotel accommodations, were seen after WHO declared coronavirus a pandemic and India cancelled all exisiting visas till April 15

twitter-logo Manu Kaushik   New Delhi     Last Updated: April 23, 2020  | 16:04 IST
Coronavirus cripples tourism sector; airlines, hotels worst hit
Tourists being scanned for coronavirus infection (Photo credit: PTI)

It's literally mayhem for the tourism, hotels and aviation sectors after the international body World Health Organization (WHO) declared the novel coronavirus (COVID-19) a global pandemic on Wednesday. On the same day, the high-level group of ministers (GoM) in India issued a revised travel advisory that suspended all existing visas till April 15, 2020. The two big developments have resulted in mass-scale cancellations of travel bookings, including air travel and hotel accommodations.

As per some estimates, almost 40-50 per cent of the domestic hotel bookings have been cancelled in the past two days, and hotel fares have tanked nearly 18 per cent in the past one week. The fall in room rates is higher in leisure destinations such as Udaipur, Goa and Kerala where a lot of luxury properties have been hit due to the low numbers of foreign tourist arrivals amidst coronavirus outbreak.

The situation is even worse in the aviation sector where fares have crashed as much as 40 per cent in the past week on a lot of routes. For instance, a Delhi-to-Chennai flight ticket which would usually sell at above Rs 5,000 in the 0-15 day booking window can now be bought at Rs 2,797. As per OTA (online travel aggregator) Yatra, around 12 per cent domestic airline capacity has gone down recently due to temporary suspension of services to certain cities in China, Italy and South Korea in view of coronavirus outbreak.

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"Due to the coronavirus pandemic around the world, there has been a massive impact on the travel industry. The latest update on suspension of visas from all countries to India is expected to have a substantial impact on the foreign tourist arrival in the country which was already witnessing a drop due to the prevailing situation. We have received close to 35 per cent cancellation queries from travelers planning their trip to foreign destinations," says Sabina Chopra, co-founder, COO (corporate travel) and head (industry relations) at Yatra.com.

Darshini Kansara, deputy manager at CARE Ratings, says that 30-50 per cent of the hotel bookings across categories in India planned for April and May, the peak holiday season, are being cancelled or postponed despite comparatively lower airfares. "Most of these booking are for Kerala and Rajasthan," she says.

So far, the domestic carriers such as Air India, IndiGo, Vistara, GoAir and SpiceJet have cancelled over 150 international flights. Air India, for instance, has stopped services to Shanghai, Hong Kong, Rome, Milan, Kuwait and Incheon while the frequencies have been slashed in over 10 destinations such as Madrid, Paris, Frankfurt, Tel Aviv and Dubai. Market leader IndiGo said on Wednesday that it's witnessing 15-20 per cent decline in daily bookings over the past few days.

Analysts predict that domestic carriers are closely monitoring the developments, and will soon take a call on truncating their domestic flight schedules. "In metro routes like Delhi to Mumbai, IndiGo could curtail its frequency from about 16 now to 12-13 owing to weak demand. Though reducing frequencies in non-metro routes could create hassle for passengers," says an analyst.

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Over 15 foreign carriers, led by Cathay Pacific and Silk Air, have cancelled a large number of flights (around 500) to and from India, and more flight cancellations are likely in the days to come as Indian authorities have announced cancellations of nearly all types of visas. This is going to have a major impact on the inbound tourism segment which was already weak due to the global slowdown.

"The Indian aviation industry could see an impact of 20.2-24.7 per cent on international passenger traffic growth because of the suspension of flights to and from countries like China, Hong Kong, Iran, Italy, Japan, Korea, Malaysia, Singapore and Thailand. This is negative for the Indian aviation industry, which is already reeling under significant passenger traffic slowdown, with international traffic growth for the April-December 2019 period having witnessed a decline of 8.4 per cent," says Kinjal Shah, vice president at ratings agency ICRA.

The COVID-19, which has affected some 120 countries, started affecting the domestic aviation sector from January-end when carriers announced suspension of flights to countries like China and Hong Kong. By March 12, the list of discontinued international services expanded further to cover about 12 destinations.

In order to spur demand amidst coronavirus fear, airlines have been coming out with flash sales. AirAsia India, GoAir and SpiceJet have announced flash sales over the past two weeks. Take AirAsia India, for instance, which announced its Big Sale on Monday. Its flash sales give passengers option to book tickets at Rs 999 for 16 destinations (Mumbai, Chennai, Kolkata, Hyderabad, Goa, Pune, Ahmedabad, and others) for travel till July 1, 2021.

With over 4,300 deaths globally, rising cases in India, countries like China, Italy, Denmark, and Lebanon under lockdown, and US' travel ban to Europe, the travel and tourism sector is going to be the worst casualty of this global pandemic.

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