Travel curb by states to contain Covid-19 hurting demand: IndiGo CEO

Hoping that the Covid-19-hit aviation industry should be back on "track" within the next one-and-a-half years, budget carrier IndiGo parent InterGlobe Aviation's Chief Executive Officer Ronojoy Dutta has said restrictions on travel by certain states are hurting demand.

Speaking at an SBI-hosted virtual banking and economic conclave on 'Impact of Covid-19 on Business & Economy', Dutta also said that IndiGo had been losing Rs 40 crore per day due to the suspension of commercial passenger flight services during the lockdown.

"We are flying only 30 per cent of our January capacity. We would like to go higher but there are various restrictions from the states. All that is really hurting demand," Dutta said.

Pointing that IndiGo is quite "optimistic and encouraged" by the growth in underlying demand, he said that though regular international operations are not allowed at present, there is too much demand for charter flights to regions like Middle-East.

"In the domestic market we see a lot of growth in tier 2 cities. We are very encouraged by underlying demand but travel restrictions are really hurting (us)," Dutta said.

The travel demand at the top end is expected to shrink but there is a lot of room at the bottom-end, he said, adding, "I think, in 18-months from now aviation will be back on track with growth." He sounded hopeful on the Indian aviation industry despite the airlines globally reportedly going belly up in view of the pandemic crisis, saying that domestic aviation is expected to do well once the regional hubs created by the airlines in Sout-East Asia region starts shrinking.

"I see an upside... part of the reason why Indian aviation has always struggled, and I will point to Air India and (erstwhile) Jet Airways, is because we have all these hubs around us, which have a lot of traffic out of India. In the new world, in the new normal, because they rely so much on connecting traffic, these hubs will have to shrink. I think Indian aviation will do better (then)," Dutta said.

"When there was a lockdown, we were really burning through cash. In fact there was a point of crisis when we were burning Rs 40 crore a day when we were not flying at all. That is the kind of number that hit us. The more flying we do, the better the numbers become," he said but refused to share by how much that per day loss has come down now.

Dutta said that there is volatility across industry but added that IndiGo always pays a lot of attention to the balance sheet.

"We are very very focussed on our employees. At the same time we have this cash burn issue and we are trying to balance it out. So far we have taken the hit through pay cuts, leave without pay and through that we are trying to manage," he added.