Indigo, SpiceJet shares crash in morning trade after India keeps flights grounded till May 31
- India’s major airlines Indigo,
SpiceJet sharesfell by nearly 5% in early trade on May 18.
- This came after the Ministry of Home Affairs said that all domestic and international air travel of passengers would be prohibited, except for domestic medical services.
- Finance Minister Nirmala Sitharaman on Saturday in her relief package announced to open up more of its airspace for airlines to ply.
Under India’s new lockdown extension to which netizens are calling Lockdown 4.0, the Directorate General of Civil Aviation (DGCA) extended the prohibition on scheduled domestic and international passenger flights till May 31.
This came after the Ministry of Home Affairs in its new guidelines for Lockdown 4.0 said that all domestic and international air travel of passengers would be prohibited, except for domestic medical services, domestic air ambulance and for security purposes.
Shorter route and cheaper fuel fails to woo investors
Finance Minister Nirmala Sitharaman on Saturday in her relief package to cushion the doomed economic sector announced to open up more of India’s airspace for airlines to ply. She also said the sector would be provided with ease in taxation as well as restrictions to bring down costs for aviation firms.
“60% of the Indian airspace is freely available because it is fairly restricted for civil and defence purposes, so we have been taking longer routes. This has to be rationalised for optimum utilisation of time and fuel. Customers can get to their destinations quicker and cheaper,” FM Sitharaman said.
However, the aviation industry experts were disappointed as no direct benefits were announced.
“The measures announced on Saturday are all long term. The industry at large needed immediate direct benefit to survive from the impact of COVID-19 pandemic. Some of the airlines are on the verge of going bankrupt. We really expect the government to come up with a second round of measures,” a senior executive of a private carrier requesting anonymity told TNIE.
The aviation industry is staring at losses to the tune of ₹25,000 crore, according to a CRISIL report.
“These are preliminary estimates, and aggregate losses could increase if the lockdown is extended beyond the first quarter. As and when operations resume, overall operational capacity will hover at 50-60% for the rest of the fiscal. Consequently, mergers and acquisitions of airlines, and relook at expansion plans of private and upcoming greenfield airports would be possibilities," said Jagannarayan Padmanabhan, director and practice leader, transport & logistics, Crisil Infrastructure Advisory.
Globally, the industry’s revenues could be cut by $252 billion in 2020.
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