Ease of Doing Business for MSMEs: The Indian tours and travel sector is likely to see its revenues recovering to more than 70 per cent of the pre-pandemic (before the financial year 2019-20) level in the current financial year on the back of high pent-up demand and growing confidence among people to travel amid the decline in Covid cases from last year, rating agency Crisil Ratings said on Tuesday. “While full recovery to pre-pandemic level is expected only by fiscal 2024, continuing recovery with improved operating profitability, supported by cost-control measures, and healthy liquidity will support credit profiles from here,” according to a Crisil study.
“High pent-up demand, eased restrictions, and higher consumer confidence are expected to drive recovery in domestic travel to more than 80 per cent of the pre-pandemic level,” said Naveen Vaidyanathan, Director, CRISIL Ratings. On the other hand, corporate travel should also rebound to more than 70 per cent as corporates increasingly resume work from the office though outbound and inbound travel should see a more gradual recovery as restrictions in other countries ease gradually, Vaidyanathan noted.
Growth in revenues for the tour and travel sector, which stood at only around 20 per cent in FY21 of the pre-Covid levels, was estimated at 40 per cent in FY22 even as the second wave had slowed down the recovery during the peak travel season of summer.
“There are four components of tour and travel market. First, ticketing (both international and domestic) and second, domestic tourism have recovered. Third, outbound travel has started to pick up to at least nearby countries like Thailand, Singapore, Dubai, etc. However, the fourth segment, which is the bread and butter for tour operators, inbound travel hasn’t picked up due to the geo-political risks such as the Russia-Ukraine conflict and high international fares,” said Rajiv Mehra, President, Indian Association of Tour Operators (IATO) and Managing Director, Uday Tours & Travel.
The current volume of inbound queries for Mehra has been one-two per week in comparison to 10-12 per day before Covid. IATO has around 1,700 tour operators as members, of which almost all are MSMEs under Rs 250 crore turnover.
Subscribe to Financial Express SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises
The jump in international airfares has been due to the increase in energy prices globally on the back of supply concerns following Russia’s invasion of Ukraine and post-Covid return in demand, PTI had reported as Jet fuel prices on Saturday saw the eighth straight jump this year to the all-time high. The prices increased by Rs 277.5 per kilolitre or 0.2 per cent to Rs 1,13,202.33 per kl in Delhi and Rs 111,981.99 per kl in Mumbai, as per a price notification of state-owned fuel retailers. Moreover, international flights were banned till March 26, 2022. With the resumption of flights, the prices are likely to decline a bit.
The one-way economy class price for let’s say Mumbai-Doha was still between Rs 11,000 to Rs 23,000 in comparison to around Rs 18,000 in August last year. Also, the Delhi-Newark (US) flight was currently Rs 51,000 – Rs 61,000 and more vis-a-vis Rs 87,000 in August last year while for other prominent routes like Delhi-London, the cost currently was upwards of Rs 26,000 in comparison to over Rs 1 lakh in August last year.
“We will see a rebound in inbound queries during travel season, that is, after September. For that, all airlines have to operate at maximum strength with all aircraft engaged. Also, fuel prices have to decline for airfares to come down. Thereafter, 70 per cent recovery is expected in FY23,” Jyoti Mayal, Vice Chairperson, Federation of Associations in Indian Tourism & Hospitality told Financial Express Online. Mayal also runs a corporate travel agency New Airways Travel.
“Corporate travel is still not where we think it should be and might take the longest time to revive. The queries are low and haven’t reached even 40 per cent of pre-Covid levels,” added Mayal.
However, the continued demand recovery, along with a sustained focus on prudent cost measures and adoption of technology, could result in operating profit of over Rs 150 crore this fiscal for travel operators, Crisil said even as any further wave of the pandemic would need monitoring. “Still, I don’t think if there is a new wave it would come as strongly as the first two waves,” said Mayal. The number of Covid cases has seen an uptick in the past few days. For instance, Delhi’s positivity rate on Monday had jumped to 7.72 per cent before dropping marginally to 4.42 per cent on Tuesday, according to health department data.
