Covid-19: Shares of Indian airlines drop as government suspends travel

Shares of India-based airlines fell after the government moved to curb travel into the country to prevent the spread of the coronavirus (Covid-19), which subsequently prompted the companies to opt for significant ticket discounting.

Shares in SpiceJet fell almost 19%, even though it offered one-way tickets for just $13, along with free meals and seats, reported Reuters.

IndiGo’s shares reduced by 17% and the airline warned of a profit hit on 11 March due to a drop in domestic bookings.

On 11 March, the Indian Government stated that it would suspend the majority of visas to the country to prevent the spread of coronavirus as cases are continuing to increase.

This move to cut down visas comes before the busy travel period in the summer months of April to June.

The coronavirus may also affect the government’s attempts to sell Air India, which is the only airline in the country flying long-haul international routes.

Even though most of the revenue for airlines such as IndiGo, SpiceJet and premium airline Vistara comes from domestic routes, their exposure to international routes has been growing over the last year to fill the gap after Jet Airways collapse, reported the news agency.

Budget airline IndiGo has a fleet of more than 250 Airbus narrowbody aircraft, and its overseas business contributes 25% of its total capacity and revenues.

Currently, it has already suspended flights to China and Hong Kong, as well as reduced frequencies to Vietnam. It was also compelled to suspend services to Qatar and Kuwait after these two countries issued a travel ban on India due to the coronavirus.