What is the impact of coronavirus (Covid-19) on the aviation industry?

Philippine Airlines flight schedule in Saudi Arabia

It affected not only airlines industry in India but also the worldwide aviation industry.

,IndiGo, SpiceJet Stare At Rs 7,000 Crore Hit From Covid-19 ShutdownsIndiGo, operated by InterGlobe Aviation Ltd.

and SpiceJet Ltd.

are among the worst-hit airlines as the coronavirus pandemic ravages travel demand.

The government-ordered suspension of all domestic flights starting midnight of March 24, albeit for public health reasons, will hurt business further.

,The novel virus, which has so far infected nearly 500 people in India and killed 10, led to a slump in domestic air traffic for the airlines, while international flights completely dried up following the governmentu2019s restrictions on travel.

,ICICI Securities estimates that IndiGo and SpiceJet may report losses worth Rs 5,494 crore and Rs 1,412 crore, respectively, in the quarter ended June if there is a complete business shutdown.

In that case, the only savings would be the variable costs, which depend on output, the brokerage said.

,Variable costs mainly comprise fuel, supplementary rentals and landing costs, while fixed costs account for employee, aircraft rentals and parking charges, among others.

,Though the losses for IndiGo are higher, the nationu2019s biggest airline is expected to tide over the crisis aided by the high cash on books.

For SpiceJet, according to ICICI Securities, the losses are expected to be lower in the first quarter on account of compensation income from Boeing from previous technical disruptions.

,If operations normalise from the second quarter (July-September), the airlines would be able to recoup most of their losses on account of lower fuel costs, ICICI Securities said.

The pace of recovery for SpiceJet, however, will be slower than IndiGo because of its higher fixed costs and less fuel efficient aircraft.

,To be sure, IndiGo had earlier this month issued a profit warning guiding its earnings for the March quarter will be significantly impacted due to coronavirus-led disruption.

,Shares of InterGlobe Aviation and SpiceJet have tumbled 35 percent and 60 percent so far in Marchu2014their worst monthly decline since listings.

,On 5 March 2020, the International Air Transport Association estimated that the airline industry could lose between US$63 to 113 billion of revenues due to the reduced number of passengers.

,IATA had previously estimated revenue losses of around US$30 billion two weeks before their 5 March estimated.

,By 17 March, IATA had stated that its 5 March estimate was outdated, and that airlines would require $200 billion in bailouts to survive the crisis.

,Oliver Wyman reported that Asian airlines reduced their available seat miles by 23 percent in March 2020.

,In Europe, the impact of the outbreak is expected to accelerate corporate consolidation in the airline industry.

,According to consultancy CAPA Centre for Aviation, most airlines would be bankrupted by the end of May 2020.

,Air travel demand rose 2.

4 percent year-on-year in January 2020, the lowest it has been since the April 2010 eruptions of Eyjafjallaju00f6kull, though travel disruptions due to coronavirus only began in late January.

,Despite a lack of passengers, regulations regarding flight slots initially compelled British airlines to fly empty planes to European airports in order to avoid losing their slots.

,Despite fuel prices dropping (due to an oil price war between Russia and Saudi Arabia) by around a quarter, it could not compensate for the fall in demand.

,Google Trends indicate that airline customer service departments have received the largest rise in online searches between February and March 2020 than any other customer service department over that time period.

,Airlines-Air Franceu2013KLM chairman Benjamin Smith stated in a video recording to staff that the situation was unprecedented.

The Financial Times reported that the French government was exploring ways to provide the airline with cash.

[13]Air New Zealand cut its long-haul capacity by 85%, and suspended several long-haul routes.

Domestic route capacity was reduced by 30%, and the company placed itself into a trading halt.

[14]The sale process of Italys flag carrier Alitalia was accelerated, with the Italian government cutting the deadline for interested investors to submit offers from 31 May to 18 March.

[15] Between the weeks of 2 and 9 March u2013 when the Italian government announced a national lockdown u2013 Alitalias capacity in international flights fell by 22 percent.

[16]American Airlines in March 2020 reduced international flights by 10 percent (55 percent for Trans-Pacific routes) and domestic flights by 7.

5 percent.

[9]British Airways CEO u00c1lex Cruz informed staff that BA was facing a crisis worse than the aftermath of the SARS outbreak or the 9/11 attacks, and wrote that jobs would be lost u2013 perhaps for a short term, perhaps longer term.

[17]Cathay Pacific cancelled three-fourths of its flights in March 2020, compared to initial expectations of 40 percent.

[18] The airline canceled 96% of passenger flights in April and May, but continued flying some passenger planes empty in order to transport cargo.

[1]Delta Airlines announced in March 2020 that it would reduce international flights by 20u201325% and domestic flights by 10u201315%.

It also froze further hiring and suspended share buybacks.

[9] The airline in March reported a 25 percent drop in bookings, and CEO Ed Bastian remarked that the hit to passenger demand was similar to the impact of the 9/11 attacks on air travel.

[19]On 23 March, Emirates has announced to stop all passager flights, starting from 25 March 2020.