indigo flight
On one hand, a big decline is being seen in jewelery stocks. At the same time, stocks of aviation and travel companies have also not been able to escape from the clutches of this decline. The shares of IndiGo, the country's largest airline, have seen a decline of 5.50 percent during the trading session. Also, in about 195 minutes the company's valuation has suffered a loss of about Rs 9500 crore. If we look at BSE data, shares of IndiGo, SpiceJet, Exigo, Yatra Online and other travel companies fell by 7 percent. Two major reasons are believed to be behind this decline. First, Prime Minister Narendra Modi has appealed to the citizens to avoid non-essential foreign travel for at least one year. On the other hand, there has been an increase in the price of crude oil in the international market. Due to which the sentiments of shares of travel and aviation companies have deteriorated.
Big fall in shares of companies
Shares of InterGlobe Airlines, the company that runs IndiGo, fell by 5.42 per cent during the trading session to reach the day's lowest level of Rs 4,276.80. On the other hand, shares of SpiceJet also fell by 4.36 per cent on the BSE to reach the day's lowest level of Rs 13.38. Shares of booking platforms ixigo, Yatra Online, Thomas Cook and Easy Trip Planners fell by up to 7 per cent on Monday. Thomas Cook suffered the biggest loss, whose shares reached the day's lowest level of Rs 91.94.
Indigo suffered a loss of Rs 9500 crore
If we talk about valuation, Indigo has suffered the most loss in this matter. There has been a decline of about Rs 9500 crore in the valuation of the company. According to BSE data, when the stock market closed on Friday, the valuation of the company was Rs 1,74,689.73 crore. Which came down to Rs 1,65,210.08 crore at 12:30 pm. This means that in about 195 minutes the company's valuation reduced by Rs 9,479.65 crore.
PM had appealed
This advice of the Prime Minister has come at a time when due to the ongoing conflict in West Asia, concerns have increased regarding the economic impact on global energy supply, fuel prices and supply chains. The Prime Minister said that in this era of global crisis, we have to take a resolution keeping our duty at the top and fulfill it with full devotion. He said that a big resolution is that we should use petrol and diesel very thoughtfully. We have to reduce our use of petrol and diesel.
Referring to the period of Covid-19 pandemic, Prime Minister Modi said that India has already successfully adopted remote working system, online meetings and virtual conferences. He suggested that in the national interest, these methods should once again be adopted on a large scale, so that fuel consumption in commuting and business related trips can be reduced.
Price of crude oil is also a big reason
Another major reason for the fall in the shares of travel companies is the rising prices of crude oil. After last week's decline, prices rose again to $105 per barrel. This happened because peace talks between America and Iran failed once again. Rising crude oil prices directly increase the cost of aviation turbine fuel.
This cost forms a major part of the total expenses of airlines like Indigo and SpiceJet. Higher fuel costs put pressure on profits, especially when ticket prices cannot be increased immediately. Due to weakening of rupee, the cost increases further, because fuel payment and aircraft lease fares have to be paid in dollars. Its effect is visible on the profits and cash flow of the entire aviation sector.
impact on passengers
For travelers, rising oil prices often mean rising airfares. This happens because airlines pass the burden of rising fuel costs on to passengers through fare increases and fuel surcharges. For travel companies, rising oil prices could slow travel demand as rising airfares and vacation costs keep people from spending as much as they want. Decrease in flight and hotel bookings may have a negative impact on transaction volume and commission.
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