COVID-19 clips the wings of travel, impacts entire tourism ecosystem

Chennai-based Natarajan Ramji had one of the best jobs in the world until COVID-19 struck. ‘Location Guru’ Ramji’s business, which involves ferrying film crews to shoot in the most exotic locations around the world such as the Machu Picchu in Peru, Iceland (where the famous Shah Rukh Khan-Kajol song Gerua was shot) and Bulgaria, has come to a standstill.

“I had two film shoot travels a month. Now, my work has been completely suspended. If this situation continues, I will be forced to cut salaries and lay off staff. How long can I sustain with zero revenues?” asked Ramji, who has a staff strength of 40 at his travel agency, Travel Masters India.

“Travel agencies all over the country are suffering; most have opted either for salary cuts or sent their staff on unpaid leave. It is a bloodbath for the travel industry,” said Ramji.

Echoing a similar sentiment, Basheer Ahmed, Chennai Metro Travels, a committee member of Travel Agents Federation of India (TAFI), pointed out it will be difficult for the travel and tourism business to sustain beyond May, with borders closed and airlines grounded.

“Many consolidators with pan-Indian presence have laid off 50 per cent of their staff or cut salaries. Our business will not pick up before December or March next year, not until people feel safe to travel. Even then, it will be essential travel that will operate, not leisure,” he added. India has around 53,000 travel agents, of whom 15-20 are big consolidators who book about 75-80 per cent of the air tickets in the country.

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Travel agents are also currently locked in a battle with various airlines to recover the ticket refund for flights cancelled during the lockdown. TAFI, which has 1,500 members, has written to the Ministry of Civil Aviation to help them recover the refund amount from the airlines.

“The problem is that the airlines are offering credit shells to passengers to fly on a later date. Some passengers just want their refund, but airlines are unable to process payments for various reasons. Also, there is absolutely no clarity on when flights will resume in India,” said Ahmed.

India’s travel and tourism industry, one of the key drivers of growth in the services sector, has been the among the first few sectors to be hit by this crisis. The virus outbreak has had a devastating impact on the entire tourism ecosystem, including hospitality sector, travel agencies, tour operators and other forms of transport. Around 10 to 15 per cent of the jobs in this sector, which provides employment to nearly 42.7 million people, are expected to shrink, according to a KPMG assessment last month.

With no clarity on when air and train operations will resume in the country after the lockdown is lifted on May 17, most travel agents have, however, pinned their hopes on domestic travel and tourism. Of late, the Ministry of Tourism too has been pushing the “Incredible India” campaigns in an effort to bolster domestic tourism.

“Travel enthusiasts are eager to get back outdoors,” affirmed Chennai-based Arjan Kripal Singh, CEO of Getupandgo, an adventure travel firm. “I have clients who are regular trekkers and travel to the mountains twice or thrice a year. But it is tough to predict when people will become confident enough to travel. Hopefully, adventure tourism will be back in business for the October season,” said Singh, whose entire summer business has been wiped out.

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“The months of April, May and June are the peak season for adventure tourism. This is the time people go to the mountains. So 75 per cent of my business has gone this year,” he added. Singh had to cancel bookings for three trekking groups to Bhutan, Himachal Pradesh, Sikkim and Uttarakhand.

The travel industry, however, does not expect international travel to reopen anytime in the near future. An employee of a leading American travel services company said, “I don’t expect international travel to commence before August end.” His company has cut 30 per cent of his salary till December.

He pointed out, “Most embassies have closed their offices till August. In my opinion, international travel will become more complex, especially for the elderly. A COVID-free visa will become mandatory. But don’t we have yellow fever tests for African countries? It will be similar,” he pointed out.

This might indeed be the future. According to the Schengen visa website, the European Union (EU) is contemplating the creation of a common document — COVID-19 passport — a ‘health secure’ certificate to enable a person to travel to the EU and Schengen states.

“Various measures such as making it mandatory for passengers to wear protective gear are being explored to make travel safe,” revealed Sandeep Dwivedi, chief operating officer at InterGlobe Technology Quotient, a travel reservation and technology services arm of InterGlobe Enterprises that owns IndiGo Airlines. He believed foreign travel will shortly open in India but with stringent compliances. “But it will take time for people to trust and feel safe to travel,” he added.

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Meanwhile, the impact on the industry has been “huge,” he admitted.

Most airlines like GoAir, Vistara, SpiceJet, and Air India, with the exception of Indigo Airlines, have gone in for salary cuts ranging from 10 per cent to 25 per cent. Aircraft have been grounded for more than 40 days following the ban on commercial travel in the country. With their primary revenue sources choked up, budget carrier SpiceJet has issued a statement that they will implement salary cuts but not slash jobs.

“Layoffs should be the last resort. We see the true DNA of an organisation in challenging times. Efficiently-run businesses will find it less hard to bear losses. Sometimes companies tend to spend more during good times on non-essentials such as setting up luxurious offices,” he added.

Many travel and tourism, and hospitality-related start-ups like MakeMyTrip, Goibibo, Oyo Rooms have gone in for furloughs and salary cuts.

Holidify, an online destination discovery platform, however, decided to “ride this out” as a company, without letting go of any of their employees. “We are going ahead with salary cuts with senior management taking deeper cuts for now,” said Rohit Shroff, CEO and co-founder.

The leadership of Ixigo, a travel app, has agreed to take a 60 per cent pay-cut, while the rest of the employees had to bear a 20 to 50 per cent cut. “It will take at least nine-12 months for travel to bounce back to pre-COVID levels,” said Aloke Bajpai, CEO and co-founder.

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Some industry leaders anticipate people getting back to travel with a vengeance once the COVID-19 fears subside. “I believe we will see people indulging in revenge travel. I also visualise a ‘healthy to board’ norm emerging for the travel industry and the popular short haul flights to Maldives, Dubai, and Thailand taking off soon,” said a travel industry veteran, Kanwaljeet Singh, at a recent webinar organised by Travtalk.

Any source of income during the off-season period has vanished for Manjunath Gowda, a Hampi tourist guide. “I used to make ₹15,000-20,000 a month during this time. No one has taken us into consideration. It is only the rich who figure in government plans,” said a dejected Gowda, who wants the Ministry of Tourism to step in to help the 100 odd guides and other small-scale businesses in Hampi, a world heritage site.

In a statement issued to the media, FAITH, the national federation of 10 tourism travel and hospitality organisations of India, has doubled the loss guidance on tourism from this pandemic from ₹5 lakh crore to ₹10 lakh crore. This figure has been calculated from the losses accruing from the breakdown of tourism supply chains in India across all its key inbound, domestic and outbound markets, said the statement.

“Learnings from China show a minimum six-month tourism shutdown before a soft opening for very short haul domestic tourism,” said a FAITH spokesperson.

FAITH representatives met Empowered Group-6, an inter-ministerial group headed by the CEO of NITI Aayog, this week and requested the government to establish a COVID-19 fund, and provide state-specific support packages to enable them to pay salaries and help them stay alive for a revival. “Survival” seems to be the critical factor for this industry buffeted by the headwinds caused by an unforeseen pandemic.