Why I am not partaking in the current Indian airline sales

Just a couple of days ago, on March 11, 2020, the WHO declared the COVID19 outbreak as a pandemic. Aviation and business travel is battered, but this declaration finally forced a lot of governments to re-rate their threat assessment of the situation. The same day, India closed their borders to all international travellers through April 15, 2020, and also close their borders to OCI cardholders, unless they are already in India as of March 13, 2020.

Airlines are already getting crushed. They use the money generated from future flights to operate current flights, hopefully, make a profit on those flights and then continue to do this forever. In the first signs that Indian aviation is not above the global trends, IndiGo issued a press statement saying,

  • In January and February 2020, IndiGo experienced a modest impact from the Coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to specific other South-east Asia markets. This capacity was redeployed in different markets without having a material impact on our revenues.
  • Over the past few days, however, week-on-week, we have seen a 15-20% decline in our daily bookings. Please note that the numbers could change from here based on how the situation evolves.

At the moment, we will be finding tonnes of sweet fare deals, because airlines will reduce their prices to attract customers. Two sales were launched by no-frills Indian airlines yesterday, March 12, 2020, and one a little earlier.

SpiceJet

a red and white advertisement with an airplane flying in the air

SpiceJet was the first off the block, launching a new sale for bookings between March 12 and 15, 2020, and travel over a year out in 2021. Most airline sales keep the peak travel periods, such as those of Diwali out of the ambit of sales because passengers will anyways pay a high price to go and be with their families over these festivals. Not just that, SpiceJet is also throwing in a free seat assignment and a meal with the fare. To an extent making it attractive to the general public but making me wonder what does this airline with a low cashflow want out of this sale.

GoAir

a blue and white airplane on a yellow background

GoAir also offered a new sale on March 12, 2020, as well for travel through June 2020. They are offering free rescheduling (fare difference will be charged). Not so alarming at all and everything points at this being just a regular sale which airlines do all the time to get some more people to book seats.

IndiGo

a blue background with yellow numbers and white text

IndiGo has been already having a sale since March 9, through March 15 for travel between March 27 and September 30, 2020. IndiGo has added a complimentary seat assignment to sweeten the offer. But even otherwise, I won’t hesitate to book with IndiGo if the price is right, given their superior cash position and actual ability to operate flights well into the future.

I have already cancelled some of my upcoming bookings, and as a result, my busy March 2020 now is cleared out for the rest of March 2020 at the moment. The reason I am not booking tickets at the moment is also that we don’t know when this situation will be behind us.

Would love to hear if our readers are booking these cheap tickets at the moment or skipping them like I am?


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About Ajay

Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe. Ajay is a frequent contributor and commentator on the media as well, including ET Now, BBC, CNBC TV18, NDTV, Conde Nast Traveller and many other outlets.

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Comments

  1. Booked one BLR-DEL economy on SpiceJet. Got it for 2600 (for Diwali- could book Diwali tickets as I am clear about when I’ll be traveling) and SpiceJet was offering a free meal and seat selection.
    Even if the airlines goes bankrupt, 2600 is not a major amount.

    Also booked DEL-IXM return tickets on indigo for July end. Got it at a very attractive price.

  2. On the onset ,it seems a baised article,demeaning the capability of a turnaround airline story like spicejet.Seems that all boardroom minutes are leaked out to your desposal,or some cooked up stories to make it look more spicier.The airlins has been offering sale like these since the takover by the new management(recollect the re 1 fare).There are lot of developments on the cashflow side,if you are not aware.Pl take this comment with a pinch of salt.Sorry to disagree.Regds

    • @Nair.PV, their safety, security and financial records are very well known. Travelled with them yesterday and they are being unable to keep their aircraft maintained. The 1 Re. fare was offered by the old management, not the new one. Last cash and cash equivalents on the Balance sheet was about 59 crores. They add Boeing compensation which even Boeing has not agreed to yet to show a profit. A lot is wrong with that airline, and you should take your own comment with a pinch of salt. Cheers

      • Spicejet did a massive expansion using debt. They might not survive this crisis. Debt on the Balance Sheet has jumped up significantly as on Sept 30, 2019. They hardly have any cash on the balance sheet and close to zero investments. Promoter have pledged their shares to raise funds. Spicejet is also known for their aggressive accounting policies. So it’s difficult to trust their numbers.

        Operating Leverage is a dual edge sword. It can amplify returns in good times and it can kill you in bad times. They have to pay lease as per the terms they agreed whether they fly their planes or not.

        Situation for Spicejet looks real bad. Damage to their Balance Sheet will be done even if they manage to survive the Corona crisis. It may meet the fate of Jet Airways in the long run.

  3. I’m looking at cancelable /reschedulable options for June domestically n August internationally, in the hope that the virus would have flatlined by then

    • I really hope so. But its unlikely as there are still unofficial number. In US its bad speciAlly in Cali. Everyday number is going up. Less people on road. All public an amusement park are closed. An Italy more than 3000 people are test positive.

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