Indigo and SpiceJet at risk in 2022 due to Omicron variant

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As the second wave Covid-19 restrictions ease in the latter part of 2021, significant air traffic has been evident in the skies. People have started travelling once again, for business and pleasure.

But now, with the new variant having emerged and what seems to be more infective and transmissible, regional airlines may be at risk for the new year.

Ashish Shah, an analyst, reported that December has been seeing relatively high traffic partly due to the holiday season. He adds that the traffic is more this month than it was for the rest of the year and, it has improved significantly.

As the Omicron variant looms around, it is still too early to analyze whether the variant is threatening to the extends we have witnessed and experienced in the previous year.

But, if restrictions are imposed again in the coming months, smaller airline companies like Indigo and SpiceJet will have to face similar issues that occurred in 2020. But if everything goes alright and the variant does not spoil the party, only then will these companies not face any huge losses.

According to many, 2022 seems to be the year where every sector of business returns to how it was before the pandemic. In November, the central government had decided to resume all international travel operations by December 15th 2021.

But with the emergence of the Omicron variant, the decision had to be revoked. The current ban on international flights has been postponed to January 31st.

2022 will also see the launch of Akasa air and the resumed operations of Jet Airways. The year indicates that there will be tough competition if air travel has no restrictions. Shah stated that it is not the competition between the companies, but whether this competition will worsen the pressure.

Air India had a moderately successful year now that they are associated with the tata group. Indigo, on the other hand also had a decent year despite the many restrictions imposed by the government.

The company has a relatively better balance sheet and bigger domestic share that keeps its stead stable. But, it is not the same situation with smaller companies like SpiceJet, whose stock fell by 28% in 2021.

It is understandable when both companies had faced losses. In the fiscal year of 2021, both IndiGo and SpiceJet faced a net loss of Rs.5800 crore and Rs. 1000 crore respectively.

The fiscal year of 2022 looks to be painful for the two companies but, if the situation goes back to normal, both airlines can be hopeful for a better year.

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