Travel sector hit hard by second wave of COVID-19 infections

The second wave of COVID-19 infections, which experts describe as more severe than the initial wave has hit the travel sector’s recovery process hard, particularly the airline industry.

According to Motilal Oswal’s latest report, the recent spike in COVID-19 cases in India weights heavily on the aviation sector with flyers confidence tanking, leading to further delays in the recovery of demand. It highlighted that daily passenger demand dropped by about 13% to around 246,600 passengers in the last week of March 2021 versus the last week of Feb 2021. “In April 2021, demand further fell by about 5% from the last week’s average of March 2021 to around 233,000 passengers per day.”

Nishant Pitt, CEO and Co-Founder of OTA platform EaseMyTrip, said there is at least 10 to 15% correction in future bookings across the travel industry (hotels and flights) as compared to February. “People don’t want their kids to voluntary go for such test since it’s painful for them, though the cancellations have not increased dramatically.”

The report said around one-third of total states in India have imposed further lockdowns and restrictions, but operations in the sector have not been curbed. “We keep our assumptions unchanged for now, with estimates of traffic recovering to pre-COVID levels by end of Dec 2021,” the report stated.

The rollout of vaccines in January did bring back the confidence of travellers in India, but the optimism was short-lived as the second wave swept across the globe at a faster pace infecting higher number of people. Even prior to the vaccination, the travel economy was picking up slowly. The recovery was primarily driven by northern and eastern states.

It has to noted that the airlines are facing additional issue of elevated crude oil prices which has jacked up their operational costs. The report highlighted that fact that demand for travel will remain low until the international segment comes back. Even though the developed regions like US and Europe are vaccinating a large percentage of their population, its not going to help the inbound travel segment.

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“For India, only 16% of international inbound and outbound passengers are from the US and Europe, while the majority are from developing nations, where achieving 70% vaccination may take some more time than developed nations, further delaying demand recovery in India.”