Investment information firm ICRA has maintained a negative outlook on the Indian aviation industry in view of ongoing lockouts in parts of China following the outbreak of coronavirus.
The extent of the impact of flight and ticket cancellations on the profitability of domestic airlines will, however, vary depending on the airlines' presence in these routes.
Besides the direct impact on travel to and from coronavirus-affected countries, said ICRA, the medium-term impact on Indian aviation will also depend on the economic shock to the global economy.
As for passengers on India-China sector, they account for only 0.9 to 1.3 per cent of total international passengers flying from and to India.
Thus, the suspension of flights on this sector will not result in any significant impact on the financial performance of the airlines unless the lockout is prolonged.
Historically, foreign airlines have enjoyed a high market share on international routes with the domestic airlines accounting for less than 40 per cent of total passengers carried on international routes from and to India.
Assuming the same proportion on routes to and from China and other impacted southeast Asian countries, the Indian aviation could see a maximum impact (of 19.5 to 23.8 per cent) on international passenger traffic growth if there is a complete suspension of flights to and from these countries, that is 4.5 million to 5.5 million passengers."This is negative for Indian which is already reeling under significant passenger traffic slowdown with international traffic growth for the first nine months of current financial year having witnessed a decline of 8.4 per cent," said ICRA Vice President Kinjal Shah.
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