CARE Ratings hint that there might be a drop in air travel demand by 30% this fiscal year. Earlier, the estimated figure for the decline was around 20-25% but not it has increased. With this, there is also a good chance that the airlines will increase the price of their base fares. This will be due to the social distancing norm of leaving the middle seat unoccupied. Expensive fares at a time of uncertainties in travel do not look good for the demand for air travel. Passengers are going to be hesitant towards booking flights if they are costly.
Increase In The Coronavirus Cases To Dampen The Demand Further
If the current scenario gets worse with time and there are more cases of people catching the coronavirus, it is game over for the aviation industry. The current drop in air travel demand is in view, with an expected number of people catching the coronavirus. If those numbers were to increase, the government wouldn’t allow commercial air travel in the first place. Some of the major destinations with a higher number of airline activities have become the hotspot for coronavirus. This situation needs to be resolved soon for the sake of airlines.
Government Not In a Position To Provide Relief Packages
If there is a reduction in air travel demand, then the airlines would expect that the government would step in with relief packages. But this is not likely to happen as the government doesn’t have a lot of resources. There are limited resources with very high demand. At a time like this, the government would be looking to help people in need of basic amenities and provide them with economic aid. Even now, there is no clarity from the government on whether commercial airline operations can start after the lockdown ends on May 3, 2020.
