An InterGlobe Aviation Ltd, IndiGo aircraft landing in Mumbai, India on June 20, 2023.
Indranil Aditya Nurfoto | getty images
Shares of IndiGo, India’s biggest airline, rose more than 11% before paring some gains on concerns that the US-Iran ceasefire announced on Wednesday could ease tensions on India’s aviation sector.
In a temporary reprieve, the US and Iran agreed to a ceasefire earlier in the day, with Tehran saying the safe passage of ships is “possible” for the next two weeks by coordination with the country’s armed forces.
The Middle East conflict affected the Arabian Peninsula and Iran – a major route for westbound flights from India – forcing IndiGo and Air India to operate longer, more expensive routes.
Tata Group-owned Air India, whose chief executive and managing director is Campbell Wilson resigned on tuesdayhas increased fuel surcharges on domestic and international flights in response to a steep rise in jet fuel prices. Singapore AirlinesThe company, which holds more than 25% stake in the Indian carrier, saw shares rise by nearly 3%.
In a statement, the airline quoted 100% month-on-month jump The main reason behind this decision is the cost of jet fuel.
“The Indian civil aviation sector is currently Navigating a Critical Operation and financial situation, arising out of the conflict in West Asia,” Asangba Chuba Ao, joint secretary of the Civil Aviation Ministry, said at a press conference on Tuesday.
He said Indian carriers’ services in the Gulf region have been badly affected, with more than 10,000 flights canceled in just one month.
He said Indian airlines normally operate 350 flights daily to Middle East countries, but this number has come down to 80-90 flights daily.
According to data from the country’s aviation regulator, IndiGo has about 65% share in India’s aviation market, while Air India is in second place with about 27%.
On March 18, Moody’s-backed Indian rating agency ICRA placed IndiGo’s long-term credit rating “on watch with negative implications”.Expected pressure on the airline’s operational and financial performance “Arose from increasing geopolitical conflict in West Asia.”
IndiGo shares were last trading more than 8% higher.
