Covid-19 Effect: Biz travel stares at $820 bn loss; airfares drop by 40%

With the World Health Organisation (WHO) declaring the ongoing Coronavirus spread a pandemic, and countries closing their borders to travellers, the travel and tourism industry across the world is facing serious setbacks. As per a report by Global Business Travel Association (GBTA), the business travel sector is set to lose $820 billion in revenue. This number is a steep climb from the previously estimated $560 billion hit. GBTA states that China is expected to lose $404.1 billion in corporate travel, the highest; while Europe is set to lose $190.5 billion.

The Asia-Pacific region has taken the hardest hit in terms of business travel. As a precautionary measure, the Indian Government has placed visa restrictions for a month till April 15, 2020, which has put a further strain on the travel and tourism industry. The Ministry of Tourism’s figures put foreign tourist arrivals at 1,103,380 in January 2019 as compared to 1,045,035 in January 2018, registering a growth of 5.6 per cent. In January 2020, the total foreign tourist arrivals stood at 1,118,150, registering a growth of 1.3 per cent.

Airlines, too, are seeing a spate of cancellations, making it even more difficult for an already struggling sector. InterGlobe Aviation, the parent company of Indigo Airlines, mentioned in a release, “Over the past few days, however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings.” There are news of various airlines slashing their airfares as demand drops. Last Friday, Turkish Airlines charged only ₹46,000 for a flight to London and back. Generally, a Mumbai-London flight costs around ₹80,000 this time of the year. A recent 256-seater Singapore flight from Mumbai had only 25 passengers.

Online travel sites such as Yatra.com, too, have been impacted. Speaking to Agully, Sabina Chopra, Co-Founder and COO, Corporate Travel & Head Industry Relations, Yatra.com, admitted, “We have received close to 35 per cent cancellation queries from travellers planning their trips to foreign destinations. With few Indian airlines having suspended flight operations to destinations with high Coronavirus risk, airfares have dropped by 40 per cent to affected destinations. There has been about 18 per cent drop in hotel rates and we are receiving cancellation requests from various travellers, who are wary of taking up trips domestically as well.”

An industry expert, who did not want to be named, told Adgully, “We normally witness huge activity amongst the travel and tourism brands in media during this time of the year. But the sudden and unfortunate attack of Coronavirus has put the brake on spending and has made many travel brands to withhold their campaign activity. Right now, it’s a wait and watch situation for brands to take the next step.”