Indian travel industry shrugs off volcanic fallout  

April 28, 2010

The ash cloud that hovered over Europe after the eruption of the dormant volcano in Iceland seems to have cleared. But the business impact of the eruption on various domestic travel and tourism companies is still unclear.

Moneylife questioned a number of players in the travel and tourism industry on how they were impacted due to the ash fallout. Many companies refused to comment. On the other hand, the few who did comment, had contradictory views.

Karan Anand, head, (Relationships and Supplier Management), Cox & Kings India Limited, said, “We feel that the situation will become normal by the first week of May. You could expect cancellations from some corporates, but leisure continues to grow. Leisure travellers would rather reschedule their trip rather than cancel them.” When asked about the impact on Cox & Kings, Mr Anand said that their business hasn’t been affected much as there was a surge in bookings (after the travel ban was lifted). He added, “There has not been any loss. In fact, customers have rescheduled their bookings and airlines have not imposed any cancellation charge at all for such passengers.”

Ashwani Kakkar from Mercury Travels seems to see things in a different light. He said, “There has been a tremendous impact on the entire sector. If you look at the airline industry, IATA has reported a loss of $1.2 billion. Plus if you consider the widely-spread business of travel agents, tour agents and companies—or even hotels—there has been a negative impact. Our corporate customers and leisure travellers were stuck in Europe and citizens from abroad were looking for a way out in India. We were suffering some losses.”

According to Keyur Joshi, co-founder & COO of MakeMyTrip.com, a travel portal, “While the crisis was at its peak, we experienced some major changes like cancellations, and queries for alternate holidays. Airlines in Europe have suffered heavy losses due to the cancellations and alterations made by travellers to their travel plans. India thankfully was not affected just as badly.”

Travel companies state that people within the organisation were working round the clock to combat the chaos. As far as the overall impact on the industry is concerned, Mr Kakkar explained, “It is a huge industry—you cannot easily get numbers. There are as many as 40,000 agents and sub-agents in the country. It is difficult to get a survey done on the overall impact.”

Companies seem to be optimistic over the industry’s growth prospects for the near future. Caper Travels’ spokesperson Dev Prasad said, “Last year, there was a recession and companies were coping with losses. This year is extremely positive for us as business is gradually growing. But it (the volcanic eruption) didn’t affect our business in any which way.” 

Mr Joshi of MakeMyTrip.com seemed confident as well.”With the economy recovering from recessionary pressure, people are taking up travel and holidaying again. May it be day trips, short weekend getaways or long holidays, people are willing to explore places, spend for the same and have a fun holiday,” he said. — Ashpreet Sethi