War crisis to hit IT cos' travel vertical

Fastening Earnings Guidance

- Russia-Ukraine war creating panic among travellers

- Russia's Aeroflot worst hit

- Finnair, Lufthansa, AirBaltic, Singapore Airlines cancelled flights to Russia

- Finnair, European firm EPAM Systems lowered earning guidance

Bengaluru: The nascent recovery seen in the travel and hospitality vertical of Indian IT services firms may be delayed as the Russia-Ukraine crisis disrupted the global tourism industry to a significant extent.

EU region is one of the favourite destinations for tourism sector and the sanctions imposed by the EU and the US on their airspace for Russian flights and the retaliatory sanctions by Russia have created a sense of panic among travellers. This is leading to cancellation of flights apart from falling search for bookings.

As a result, many airline companies have cancelled flights to Russia and are taking detour to avoid Russian airspace for reaching other destinations. As a result, Finnish national carrier Finnair cancelled flights to Japan, Korea, China and Russia and scrapped its 2022 growth guidance. Similarly, Russia's Aeroflot is one of the worst affected airlines due to this war. Lufthansa, AirBaltic to Singapore Airlines; all have cancelled their Russian flights. Even cargo traffic has been falling due to this war-like situation.

Though hotels and other tourism related entities have not seen much disruption except the conflict zones, analysts fear that business will get impacted if the war lingers.

Owing to the pandemic, most travel and hospitality players have digitalised many of their operations to save cost apart from providing contactless services. Many of these companies are the clients of Indian IT services firms that have enabled this digital transformation journey. "Recovery in travel and hospitality vertical can be delayed. It was recovering post the pandemic. If the conflict lingers, this recovery is going to be delayed," said Ashis Dash, research analyst at brokerage firm Sharekhan by BNP Paribas told the BizzBuzz.

He, however, said that the impact could be ascertained after the conflict comes to an end. Meanwhile, sources in the IT companies are of the opinion that the Russia-Ukraine war has not impacted them so far in business term. However, European firm EPAM Systems has withdrawn its first quarter and full year earnings guidance owing to the conflict that has a significant number of workforce operating from Ukraine.