After opening the day in green, share markets in India have continued the momentum and are presently trading above the dotted line. Sectoral indices are trading mixed with stocks in the and stocks in the PSU sector trading in green. While stocks in the IT sector are trading in red.
The BSE Sensex is up by 95 points (up 0.3%) and the NSE Nifty is trading up by 38 points (up 0.4%). Meanwhile, the BSE Mid Cap index is trading up by 1.1%, while the BSE Small Cap index is trading up by 1.4%. The rupee is trading at 64.96 to the US$.
The company’s shares witnessed selling pressure after the aviation regulator, Directorate General of Civil Aviation (DGCA) ordered the grounding of 8 Indigo and 3 GoAir planes.
DGCA ordered the companies to ground A320 Neo aircraft fitted with Pratt & Whitney engines, citing safety concerns.
The DGCA order follows reports of three separate incidents involving mid-air engine shutdowns for the same type of aircraft.
IndiGo controls 39.6% share of the domestic market, with 153 planes and over 1,000 daily flights to 49 cities.
Indian Aviation Spreading its Wings
Air travel has recorded double-digit growth for 40 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy.
What’s foreseeable for India’s aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Earlier this month, Brent crude oil briefly breached US$70 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.
Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.