Omicron threatens airline revival

International air travel has already been hit by a surge of new cases, with many countries and states resorting to flight and border restrictions to control the spread of the virus.

Although the number of hospitalizations and deaths due to Omicron is lower than in the delta version, uncertainty over travel restrictions, self-isolation rules and high testing and medical care costs are driving demand for travel.

“We entered 2022 with dark clouds and uncertainty. The next two quarters are likely to be tough for the aviation sector, especially with airlines losing capacity on the international front. We don’t yet know how serious the Omicron version will be, said Mark Martin, chief executive officer of aviation consulting firm Martin Consulting LLC.

“However, we expect some kind of normalcy to return by April,” he added.

Akasa Air, which is set for a summer launch, is expected to disrupt a market dominated by low-cost carriers (LCCs) like IndiGo with its ultra-low-cost carrier (ULCC) model and deep-pocketed promoter backing. have hope. Billionaire Rakesh Jhunjhunwala.

The airline has already placed orders for 72 Boeing 737-8 MAX aircraft for $9 billion, paving the way for its launch.

“Akasa is expected to disrupt the low-cost carrier market led by IndiGo, but only after reaching a massive scale. In the short term, a well-funded airline could lead to churn in top talent in the industry and impact airfares on some sectors,” said a senior official of the Gurugram-based airline, speaking on condition of anonymity.

The re-launch of old giants, Air India and Jet Airways, owned by the Tata Group and the Jalan-Kalrock consortium, is expected to intensify competition in the domestic aviation sector.

While the Tata group is expected to acquire Air India and its arm Air India Express from the government in January, Jet Airways’ new owners—UAE-based businessman Murarilal Jalan and Colorrock Capital—await the revalidation of the airline’s air operator. Huh. Permission to start operations in early 2022.

However, the Jalan-Kalrock consortium has delayed the airline’s launch several times following similar announcements.

Shareholders of InterGlobe Aviation Ltd, which operates the country’s largest airline IndiGo, voted last week to lift the ban on promoter share transfer, signaling the end of a protracted battle at the airline.

The amendment to InterGlobe’s Articles of Association (AOA) is expected to exit co-founder Rakesh Gangwal, who is locked in a bitter fight with another co-founder, Rahul Bhatia.

Until the amendment, clauses of the AOA give Gangwal or Bhatia the first right to buy the shares of another if they decide to exit the company. The amendment allows either of the two to sell its shares to a third party.