Airlines may sustain losses on limited operations, demand worries

Despite the limited number of flights and price restrictions, analysts believe that the fares are yield accretive for airlines

Aviation stocks InterGlobe Aviation (IndiGo) and SpiceJet gained 5-7 per cent each on Thursday after the government announced plans to open up domestic air travel from May 25. This move came as a relief for airline companies, which have not flown a single flight for the last two months even as they incurred fixed costs.

The resumption in air travel, however, will be limited as companies can only operate a third of their capacity. Further, fares charged to customers will be in a certain band, based on the route and distance.

Despite the limited number of flights and price restrictions,