AirAsia drops cabin baggage allowance to 5kg in the name of social distancing

Air Asia has just announced its new policy post covid-19 and a major change is that cabin baggage allowance has been dropped from 7 kg to 5 kgs.

To me this looks like a trick to make people buy check-in baggage which is chargeable.

• I don't understand how weight of a bag is related to corona virus spread. 
• What does wrong if I carry 7 kgs in my closed cabin bag? 
• How exactly 2 kg less will help avoid unwanted contact?. It doesn't.
• Would AirAsia allow a free check-in of 2 kg bag to compensate? No
• Why apply this retroactively to customers who have booked in the past hoping to manage with 7 kg cabin baggage allowance?

If you agree with Air Asia or can explain how exactly lower cabin baggage weight helps please comment. I travel mostly without checked bag and this lower limit will complicate my travel plans and make me more hesitant towards AirAsia, as cost of checked-baggage is often almost same as ticket price. No other airline in the world has reduced cabin baggage allowance in the name of social distancing.

Other factors seem reasonable. Passengers need to bring their own masks else boarding will be denied.

There's no commitment to leaving middle row empty. AirAsia will try to follow seat distancing when occupancy allows.

Also no mention of "bring your own food policy". I am guessing Air Asia would still want to sell their meals n make money.

StarAir New routes Belgaum-Indore-Ajmer flight

Star Air has announced a a few new flights which I didn't notice earlier. Of course this was done before lockdown was announced.

These flights are -

• Ajmer (Krishnagarh airport, 27 kms from Ajmer) to Indore
• Indore to Belgaum (Belagavi, Karnataka)
• and Belgaum to Bengaluru

From Ajmer you can fly one stop to Belagavi via Indore but not two stop to Bengaluru (via Indore and Belagavi)

I find these destinations a bit odd-are there lots of people flying direct between Indore and Ajmer or Belagavi and Indore? May be not, but then, Star air operates a smaller plane, a 50 seater Embraer 145, so finding 50 passengers 3 times a week is not that difficult. For those who really want to travel, the direct flight on star air is a lot of value add- saves time and money otherwise having to fly via Delhi or Mumbai.

Hopefully Star Air will survive this pandemic and resume these flights once lockdown is lifted. 

How are world's top 110 airlines of 2019 doing now due to Covid-19 Crisis?

What is happening with World's top 100+ airlines as of now? How many are bankrupt, how many are flying? I've made an attempt to give you a summary in this post.

Method used:

1. I took SkyTrax World's top 100 airlines list of 2019 as a base
2. I have taken liberty and added about 10 airlines I felt major ones missing in the list (Air India, Srilankan etc)
3. Did an analysis on these 110 airlines of the world under multiple parameters
1. Have they declared bankruptcy/entered administration
2. Have they stopped all passenger flights? (Cargo & repatriation flights not counted)
3. If still operating have they cut 90%+ of their schedule?
4. Major news updates w.r.t this airline (job cuts etc)

Below are the major findings:

1. Only 3 airlines seem to be doing fine right now- USA's low cost airlines such as SouthWest, Spirit and Frontier- they have largely domestic operations which are not banned, getting Govt bailout money and do not seem to have any immediate distress.
2. Eight airlines have gone bankrupt in past 3-4 months. This includes Flybe, Atlas Global etc which closed before Corona Virus breakout. Many other airlines are on the blink of collapse but haven't declared bankruptcy officially. 
3. One third of world's airlines are fully grounded. (Cargo operations and repatriation flights excluded)
4. More than half of the airlines are running skeleton schedule- most of them operating less than 10% of their normal capacity.
5. A few airlines I couldn't locate any useful news. I am assuming they are operating a limited schedule and are in no imminent danger.

I have personally flown only one third of these 110 airlines. Still a long way to go.

Regional breakup here- bear with me as I've kept Asia and South East Asia separate and have tagged central america with South America.

Detailed listing below. Let me know if you have any updates. I will try to update this list end of May 2020 again. (remember CAPA report that lots of airline may go bankrupt by end of May if there's no external support?)

Disclaimer: All information as I could find from public domain at the time of compiling the post. If you find this study useful please support by sharing this in your social media accounts.

Also read: Airline recovery phases as I see it.

Why AirAsia should launch Australia Subsidiary

With Virgin Australia going into administration, Australia now has only one airline group- Qantas who will have monopoly over the skies of Australia.

Australia needs a second airline if Virgin doesn't survive. In my opinion, Air Asia is best suited to fill the gap by launching an Australian Subsidiary. Here're 5 reasons why Air Asia is best suited for this of all airlines

1. AirAsia has good experience running country level subsidiaries and integrating them into international network. Air Asia group runs Air Asia India, Thai AirAsia, Air Asia Indonesia etc. So it will be very easy for Air Asia group to set up an Australian subsidiary- like Air Asia Australia (AAA)

2. Readily available planes and crew
AirAsia's existing fleet is sitting idle 95%. It is very unlikely that they would need all of it at once after covid-19 pandemic ends and travel resumes. Air Asia can readily spare say 15-20 aircrafts for its Australian subsidiary and can get it started immediately. Over time as situation improves Air Asia can decide between buying more planes for Air Asia Australia or other such arrangements.

Most of Australia's domestic routes can be flown with A320. A few widebody A330s for long routes like Darwin-Melbourne or Perth to Brisbane might help.

3. AirAsia already has stations in Australia.
AirAsia X flies to Gold Coast, Sydney, Melbourne (AVV) and Perth in Australia. So they do have some staff and airport infrastructure in place. Starting domestic flights within Australia won't be difficult. AirAsia will have to add few more stations like Darwin, Brisbane, Adelaide etc depending on demand and their plan.

4. Feed its international network.
A sound domestic network within Australia can also feed its international operations. People can book from India to Sydney on AirAsia X and then say connect to Brisbane on AirAsia Australia.

Now someone in Bali or Manila needs to fly to Kuala Lumpur to connect to a flight to Australia. Air Asia Australia might be able to offer some direct flights between Indonesia, Philippines and Australia

5. Near zero investment, guaranteed returns
Starting a new airline is expensive proposition. No one would venture out to do so under current circumstances. But Air Asia has the planes, crew, experience and a solid business plan as well as an immense opportunity. There is no reason why Tony shouldn't consider this plan. Australian govt is also likely to provide all required support as people of Australia will eventually benefit with lower ticket prices.

What do you think?

DGCA orders refund for flights till May 03

DGCA has released a circular which has mandated airlines to issue a refund if customer insists, for all flights till May 03.

Interestingly it talks only about bookings made during lockdown period for flights during lockdown period, doesn't talk about bookings made prior to lockdown period for flights are during lockdown period.

Now we have to see how airlines respond. Will they start issuing refunds or will play some other game?

Airline recovery phases once lockdown is lifted

How would airlines recover once lockdown is lifted? What will happen to ticket prices? When will normalcy return?  Below is my assessment:

Below is an explanation
Phase 1: Resume
Once lock-down is lifted and air travel is permitted, airlines will scramble to assess demand and resume their services.

• Initial demand will be very high because lots of people want to go back to their families, to work and so on. This sudden burst in demand, along with limited resumption of services will shoot the prices through the roof.
• There will be some who needs to travel at any cost and will travel despite high corona virus risk and high ticket price. The second wave will probably kick in after a month- of people who want to travel but not that desperate- once they see that ticket price has come down from its peak and those who traveled earlier are doing fine, these people will begin booking.

But this is short lived. Within a month or two, once everyone get back to where they wanted to, demand will drop.

Phase 2: Survive

This is a crucial period for airlines-demand is low, virus risk is still high but there's no lockdown so they are free to operate their planes.

• If they operate too many planes but not enough load factor they lose more money
• If they don't operate enough flights, competitor may grab customers. 
• Those who have already booked ticket will fight for refund as airlines can no longer hide behind credit voucher saying "we can't operate flight because Govt has imposed lock down"
• Many airlines will run out of their cash in this period. Unless promoters arrange more money or govt gives some aid or airlines manage to cut lots of cost, some airlines may not survive and eventually go bankrupt.

Who will fly?

• At this point companies might want their employees to travel on work, but most employees are likely to resist- not worth the risk of getting infected or having to spend time in quarantine for company's work. Also airlines could have cut lounge access, in-flight meals and entertainment in order to cut costs and follow social distancing norms, making business travel less attractive to individuals.
• A few business owners who need to travel desperately might fly. 
• Bargain hunters may come forward to travel if they spot really cheap tickets. If airlines sell tickets super cheap- like one third or one fourth of regular prices, some deal hunters, brave people will take a risk and book. Low cost airlines like Air Asia, Ryanair etc who have mastered deep discount sales and other airlines ready to sell tickets for dirt cheap might be able to run discount sale and get some bookings this way. Regular tourists will stay away as they need to both accumulate savings to travel as well as overcome the risk of Corona Virus to gain courage to travel.
• A few people who were issued travel vouchers with 6-12 month validity by airlines against previously cancelled flight might gather courage and plan a short trip, lest they stand to lose their voucher value.
• There may be some more people willing to fly but the social stigma attached with travel (that it is risky, unnecessary etc), along with possible risk of infection/quarantine or the risk of people around discriminating because of their travel will put these people off. Social acceptance that travel is safe will have a huge impact on how many people will venture to fly.

Phase 3: Recover

Surviving airlines now try to consolidate their position, recover market share and win their passenger back. At this stage assuming Corona Virus Pandemic is largely under control (probably a few hot spots would remain around the world but rest of the world may open up with caution), all other stakeholders in travel industry will come forward to lure their customers back. Hotels, travel agents, cruise liners, OTAs, tourism boards etc would launch multiple initiatives to encourage leisure travel. This would begin enticing people back to flying.

Also long time with no travel would make people restless and many would slowly resume going on trips

Once Corona Virus scare goes away, business/corporate travel will also resume.

Phase 4: Back to Pre-Corona Virus level (Normalcy)

This is the happy state everyone is hoping for. Sooner or later we should be able to achieve this, but it is a factor of
- How long the Corona Virus Pandemic will last
- How many airlines will survive multiple years with low demand and revenue
- Probability of virus coming back and how strict are govts in enforcing sustained precautionary measures.

My rough guess is we are looking at two years time to reach 2019 kind of travel volume, after countries start lifting lock-down and start allowing people to travel. Do share your thoughts.

Will flight tickets get cheaper or expensive after coronavirus crisis ends?

Once the Corona Virus crisis ends- whenever it happens- and markets open up, would flight tickets get super cheap or will the get expensive? What do you think will happen?

Below are the reasons to believe airfare will Go UP once the crisis ends
1. Less competition: If several airlines go bankrupt unable to withstand the prolonged crisis, remaining players will not have any need to lower the prices. They can keep their prices high and still manage to find passengers

2. Desperate passengers: Once world opens up, lots of people will be desperate to travel- those locked up elsewhere and wanting to meet their parents/family, businessmen who need to close major deals and so on. While leisure travelers may take longer time to come to airport, airlines may attempt to milk these business/personal travelers who are very eager to travel.

3. Possibly long term advise to avoid non essential travel: Even after crisis ends, to ensure it doesn't reappear, governments world wide might advise people to continue maintaining social distance and avoid non essential travel for a much longer period of time. This means people will avoid travel if they can. Discounts may not entice leisure travelers if there is a fear of catching the virus.

4. Airlines may coordinate among themselves to avoid competition: Airlines will probably inter into mutual agreements to plan their networks such that they avoid direct competition, such that both airlines can benefit. This will keep the prices high.

Reasons to believe airfare will Go Down:
1. Airlines desperate for cash: When survival is at stake, airlines are known to launch crazy low fares. Every dollar counts, so even if a fare is not profitable, airlines will try to offer low fares and pocket as much as cash as they can so that they get some cash for day to day operations.

2. Govt boost to tourism: In order to help the totally grounded travel and tourism industry, governments worldwide may launch several incentive programs, including bail outs, reduced taxes, easy visa rules and other programs to encourage people to come out and travel. If airlines get government lifelines they may be bit generous in setting fares lower.

3. People have less cash: Middle class will have lot less savings left and travel will not be their priority. If airlines need to entice them to travel, they need to be tempted with really low fares.

At this moment it is too early to predict. Outcome could be different depending on how long the Corona Virus crisis lasts (3 months, 6 months, 12?). Not all airlines and all parts of the world may see same trend. Also opportunities come to people who are flexible. Some airlines and some destinations will definitely be super cheap. What do you think will happen?

Is it safe to book travel from 15th April?

Airlines and railways are accepting bookings from 15th April. I got multiple queries asking if it is safe to book a ticket post April 15th.

Here's the answer for you.

Fact 1: Airlines haven't reopened booking- they had only stopped accepting bookings for lock down period.

Airlines stopped accepting booking till April 14th due to lock down. They hadn't blocked it altogether and then re-open from April 15th. So it was possible to book a ticket on April 21 even when nation wide lockdown was announced in March last week.

Fact 2: Booking a ticket is not a guarantee of flying
Airlines accept future booking hoping everything works fine. However lockdown may get extended, airline may cancel your flight, so the risk still remains. Your booking a ticket will only give some cash to airline without any guarantee of actual travel.

Fact 3: No refund
Airlines are currently not refunding money on cancelled flight. It is causing big trouble to thousands of passengers. If you book now, be ready to bid goodbye forever to your money. Airlines at best will offer some credit shell/reschedule option with half dozen rules on their usage.

Additional risks:

• Some airlines are extremely low on cash and have failed to pay salaries on time. It is not clear how long they will survive without govt/investor support.
• There's no sign of corona virus getting under control as of now. At least another month it is unlikely world will be back to normal. Best to hold on to your plans and cash.

Given the situation, I would not recommend booking flights for immediate future unless you face following
- You need to travel desperately- you are ok to trade off some money (no refund, only reschedule/credit shell) against a remote chance of traveling asap
- You have to travel anyway, now or later- If lock-down doesn't get lifted you are OK with reschedule option

For all avoidable travel, I would say wait till end of April for clarity before making any fresh booking.