In what would be a major relief for passengers and airlines alike, the Central government announced lifting of curbs after two years on international air travel from March 27. This means that regular international flights to and from India will be resuming under the commercial airlines' summer schedule that comes into effect the same day.
The aviation regulator, Directorate General of Civil Aviation (DGCA), had curtailed all commercial operations from March 23, 2020, around the time the country announced the world's largest lockdown to contain the spread of the Covid-19 pandemic. Restrictions on domestic operations were, however, gradually lifted from May 25 of that year.
"This is a welcome move and comes up at a time when leisure and holiday travel is reviving. Also, this will help the airlines to sweat their assets by plying on lucrative international routes," said Jagannarayan Padmanabhan, director and practice leader for transport and logistics at CRISIL Infrastructure Advisory.
"This will indirectly benefit connecting international flights plying on domestic sectors. From an inward travel perspective, many international airlines have codeshare agreements with Indian carriers and this will lead to the feeding of additional traffic to them. Last but not the least, this gives directional confidence to all sectors and stakeholders about things returning to normalcy," added Padmanabhan.
Lauding the announcement, Ronojoy Dutta, whole-time director & CEO at the country's largest airline IndiGo, said, "This step will provide impetus to the economic recovery for the sector and the nation, with borders opening for tourists. We look forward to connecting our customers to the people and places they love. We will soon be announcing the schedule for our international destinations, in accordance with these new guidelines."
Air bubble agreements, surge in oil prices
As a temporary measure, India had negotiated air transport bubbles or temporary air travel arrangements with 37 countries for providing commercial flights during the period of suspension. These arrangements are reciprocal in nature, with airlines from both countries getting to enjoy similar benefits.
"The air bubble agreements had provided a much-needed cushion to the Indian carriers in the international market. While the news of reopening the international operations is welcome, the removal of air bubbles and subsequent application of the bilateral air agreements might create a strong competition to Indian carriers in the current high oil price scenario," observed Rohit Tomar, partner at Mumbai-based aviation advisory Caladrius Aero.
"It needs to be seen how the competition plays out in key international markets such as the UAE and Singapore post resumption and removal of air bubble agreements," he added.
The period had also witnessed a spurt in chartered flights by several scheduled commercial airlines as they attempted to fill up the void created by the absence of regular flights. The resumption of international operations shall be subject to strict adherence to guidelines issued by India's health ministry.
Others, while terming the announcement a significant move from a macroeconomic and aviation industry perspective, have warned of short-term headwinds in the form of sudden spike in crude oil prices amid the Ukraine conflict.
"Airline companies will most likely heave a sigh of relief as this move ought to accelerate their recovery to pre-pandemic levels of capacity utilisation over next six to eight months. The growing concerns around rising aviation turbine fuel (ATF) prices, though, remains a hurdle on this path to recovery at least in the very short run," said Sumit Singhania, partner at Deloitte India.
Brent crude was trading at $132.2 a barrel at the time of the story being filed. Experts have already warned of the steep rise in jet fuel prices eroding the fourth-quarter earnings of Indian carriers. Depending on the airline and type of operations, the share of ATF in an Indian carrier’s total operating cost can range anywhere between 25 to 45 per cent. ATF is currently priced at Rs 93,530.66 a kilolitre in Delhi.
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