Aviation stocks make a crash-landing

Airline as well as other stocks belonging to the travel and tourism sector tumbled as World Health Organisation (WHO), recognised COVID-19, commonly known as Coronavirus as a ‘pandemic’. Additionally, US President Donald Trump, also announced that his administration will be implementing new travel restrictions which will prohibit travel from Europe to US except from UK, from March 13, 2020 and will last for at least 30 days.

Coronavirus crisis has seen a drop in the new infected cases in China, with travel being on the path of resuming to normal in the country itself. But on one hand, a rapid increase in new infected cases is seen across the other East Asian countries and in Europe with Italy being the main epicenter. Additionally, as a safety measure, various countries have started to implement travel bans by cancelling tourist visas and restricting entry of certain foreign nationals. With effect from March 13, 2020, India suspends all existing visas, except for diplomatic officials, UN/International organisations, and employment, project visas till April 15, 2020. Indian government also advised the travel companies to cancel any upcoming travel tours for the safety of all.

IndiGo reported that it cancelled its flights to China & Hong Kong and reduced the frequency to certain other Southeast Asia markets in the month of January. Further, the week-on-week witnessed a drop of 15-20 per cent in its daily bookings. This situation will surely impact the company’s profitability and quarterly earnings.

Reacting to the chaotic and uncertain situation, on Wednesday, the stocks of InterGlobe Aviation was trading at Rs 981.60, down by 15.05 per cent or Rs 173.85 per share; Jet Airways was trading at Rs 18.95, down by 4.77 per cent or Rs 0.95 per share; Thomas Cook (India) was trading at Rs 38.10, down by 11.60 per cent or Rs 5; Spice Jet was trading at Rs 49.90, down by Rs 10.45 per share or 17.32 per cent, which is close to its lower circuit of 20 per cent.