Travel Stocks Tumble as PM Modi Urges Restraint on Foreign Travel
IndiGo, Spicejet & other travel stocks plunge up to 7%. Two big reasons why
The Economic TimesImage: The Economic Times
Shares of travel companies like IndiGo and SpiceJet fell by up to 7% following Prime Minister Narendra Modi's call for citizens to avoid non-essential foreign travel for a year. This decline is attributed to rising crude oil prices and the ongoing economic impact of geopolitical tensions in West Asia.
- 01Travel stocks dropped significantly, with IndiGo and SpiceJet seeing declines of over 4%.
- 02PM Modi's advisory aims to curb foreign travel and conserve resources amid rising oil prices.
- 03Soaring crude oil prices are increasing aviation fuel costs, impacting airline profitability.
- 04The Prime Minister encourages domestic tourism to support the economy.
- 05Higher airfares due to rising fuel costs may deter discretionary travel spending.
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Shares of travel-sector companies, including IndiGo and SpiceJet, experienced a steep decline of up to 7% on Monday after Prime Minister Narendra Modi advised citizens to avoid non-essential foreign travel for at least a year. This recommendation comes amid concerns over the economic ramifications of the ongoing conflict in West Asia, which is affecting global energy supplies and driving up crude oil prices to $105 per barrel. As a result, airlines like IndiGo and SpiceJet saw their stocks fall by over 4%, with IndiGo reaching a low of ₹4,335 and SpiceJet dropping to ₹13.41. The Prime Minister's call for restraint aims to conserve foreign exchange reserves and promote domestic tourism, suggesting that citizens should prioritize local travel and celebrations over international trips. The rising costs of aviation turbine fuel (ATF), exacerbated by a weaker rupee, are putting pressure on airline margins, leading to higher airfares that could discourage travel demand. Modi emphasized the importance of civic responsibility during this crisis, urging citizens to adapt to remote working practices and reduce discretionary spending to help stabilize the economy.
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The decline in travel stocks could lead to higher airfares, affecting travelers' budgets and potentially reducing travel demand.
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