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Coronavirus impact: IndiGo grounds 16 planes; staff to take 10-20% salary cuts

Till last week, airlines like IndiGo, Air India and SpiceJet were largely affected on the international side but as the coronavirus scare has gripped the domestic market, large-scale cancellation and rescheduling are beginning to happen even among Indian passengers

twitter-logoManu Kaushik | March 19, 2020 | Updated 13:38 IST
Coronavirus impact: IndiGo grounds 16 planes; staff to take 10-20% salary cuts
IndiGo Airlines

India's largest carrier IndiGo has grounded about 16 planes out of its total fleet of 260 aircraft, says an IndiGo source. The airline is also planning to ask its employees to take 10-20 per cent salary cuts as it grapples with the impact of coronavirus on domestic and international flights.

"The load factors have gone down substantially on the domestic flights. The domestic flights are flying almost half empty, and the passengers on international flights are even lower," says an IndiGo official on condition of anonymity.

Early this week, IndiGo cancelled its Delhi-Istanbul and Chennai-Kuala Lumpur from March 18, 2020 until March 31, 2020. The airline has already cancelled flights between Bangalore-Kuala Lumpur until March 31, 2020 and Delhi-Kuala Lumpur until April 30, 2020. Till March 6, IndiGo had cancelled 42 weekly flights to destinations such as Singapore, Bangkok, Guangzhou, Chengdu, and Hong Kong owing to coronavirus and travel restrictions. Additionally, the LCC (low-cost carrier) has announced cancellation of flights between Mumbai-Jeddah and Bangalore-Jeddah from March 29, 2020 until April 14, 2020, and Chennai-Calicut and Calicut-Jeddah flights from March 29, 2020 until April 24, 2020.

On March 11, IndiGo informed stock exchanges that it has been impacted by coronavirus. "In January and February 2020, IndiGo experienced modest impact from the coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to certain other South-east Asia markets...over the past few days however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings. Please note that the numbers could change from here based on how the situation evolves."

Till last week, airlines like IndiGo, Air India and SpiceJet were largely affected on the international side but as the coronavirus scare has gripped the domestic market, large-scale cancellation and rescheduling are beginning to happen even among Indian passengers. The low demand has forced airlines to now relook at their flight schedules in the domestic market as well. Though IndiGo has thus far not announced any changes in its domestic flight schedule.

According to aviation consultancy firm CAPA, Indian carrier may initially ground around 150 aircraft, and the number is expected to grow as more domestic operations are curtailed over the coming weeks. "If the decline in traffic continues to be severe, the majority of the fleet could be grounded by April. By extension, the reduced scale of operations could impact the requirement for around 30 per cent of airline staff and up to 50 per cent of ground handing staff... For the first couple of months this could potentially be handled through mandatory leave and leave-without-pay initiatives for 1-2 months... At an industry level, consolidated losses are estimated to be in the range of $500-600 million for the quarter (excluding Air India)," a recent CAPA report said.

Some reports suggest the ruling BJP government of Prime Minister Narendra Modi is mulling over $1.6 billion rescue package for the aviation industry, which has been one of the worst affected sectors due to coronavirus.

Also read: Coronavirus: Modi govt mulls $1.6 billion rescue package for aviation sector

Indian aviation has a fleet base of about 682 aircraft with another 790 aircraft on order. The grounding of 150 aircraft would translate into 22 per cent of the capacity going out of the market. IndiGo currently has the highest share - 47.9 per cent in January - in the domestic aviation market and second-highest - 11 per cent in July-September 2019 - in the international traffic to and from India.

In the last few weeks, IndiGo has witnessed over 500 per cent jump in queries through calls and emails from passengers looking to cancel and rescheduling their flights. Recently, the airline announced waiving off change fees on existing and new domestic and international bookings made till March 31, 2020. As per the last records, IndiGo offers over 1,500 daily flights and connects 63 domestic destinations and 24 international destinations. Business Today has written to IndiGo to confirm the status of grounded planes and salary cuts. The story will be updated in due course.

Also read: Coronavirus in India Live Updates: Mumbai Dabbawalas suspend tiffin delivery service till March 31

Also read: Coronavirus fallout: IndiGo senior official says drastic decisions likely over the next week

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