Domestic flight operations in the country will cease from March 25 as the Union government stepped up its efforts to contain the spread of the novel Coronavirus (Covid-19) pandemic. As per the website of the Ministry of Health and Family Welfare, the total number of confirmed coronavirus cases in the country has doubled in a span of 72 hours to 415.
A statement from the Ministry of Civil Aviation (MCA) said operations would stop from “23:59 hours IST on 24/3/2020”. However, the restriction will not apply to “solely cargo” carrying flights. “Airlines have to plan operations so as to land at their destination before 23:59 hours on 24/3/2020,” the statement added. The MCA, though, hasn’t specified when the ban of domestic flights would be lifted.
“The government clearly sees heightened risks related to Covid-19 and is determined to take unprecedented action to slow its transmission. This is the right decision in the prevailing circumstances,” read a tweet from aviation consultancy firm CAPA India.
Last week, the MCA had suspended all international flight operations for a period of one week beginning March 22.
“Much need step finally taken by the @MoCA_GoI (MCA) to ensure complete lockdown. There is absolutely no reason why airline staff should be exposed to #COVIDー19 because a couple of people want to travel,” tweeted Vinamra Longani, head of operations for Sarin & Co., an Indian law firm specialising in aircraft leasing and finance. “This will however have a far reaching impact on Indian airlines.”
Even if domestic flight operations were to resume soon, India Ratings and Research (Ind-Ra) says that the Covid-19 outbreak would intensify the pressure on airline operators’ cash flows over the near term. This despite the fact that the price of aviation turbine fuel (ATF) has been slashed by 12% by the government, on account of falling global crude oil prices.
“In case the outbreak is not contained, social distancing measures could aggravate the impact on airlines’ passenger load factor (PLF) over a prolonged period of time. Even if the outbreak is contained within the next three months, it could take a while before air travel returns to normalcy,” read a recent report by Ind-Ra. “Although ATF prices have reduced, the combined impact of a lower PLF and downward pressure on air fares will keep the credit metrics under stress.”
The credit rating agency has accessed that Indian airlines would require additional funding of ₹3,500 crore, if the outbreak is contained in three months, and ₹14,500 crore, if the outbreak persists over a 12-month period. This additional funding would be needed, “to bridge the gap between their operating cash flows and contractual payments, i.e., lease rentals and finance cost.”
For Indian airlines, the ban on air travel “coincides with what can only be described as a destruction of demand in recent days,” says CAPA India. “The severity of disruption which the industry is experiencing will have an impact felt well beyond FY21, unless the government can provide quick and meaningful support,” it added.