IndiGo, SpiceJet Shares Decline Up to 5% Amid Sharp Increase in Crude Oil Prices

Indian Aviation Stocks Plummet Amid Geopolitical Tensions

Market Update: March 2

The Indian aviation sector has taken a hit today, with key stocks experiencing significant declines. InterGlobe Aviation (IndiGo) shares have fallen by over 5% in early trading, while SpiceJet shares are down close to 4%.

The ongoing conflict in the Middle East has led to the closure of significant airspaces in the Gulf region, impacting key transit points and raising concerns about surging fuel costs. As a result, Indian airlines, including IndiGo, Air India, and SpiceJet, have cancelled more than 350 international flights as of yesterday, with disruptions and technical stops continuing into today.

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Analysts have indicated that IndiGo could see a potential 13% decline in its Earnings Per Share (EPS) for each $5 rise in Brent crude prices. Fuel represents 40% of an airline's operational costs, making the industry particularly vulnerable to the recent spike in oil prices. To preserve links to the US and Europe, airlines are adjusting flight paths, which is anticipated to lead to longer flight durations and increased operational costs.