Indian aviation stocks have fallen today, March 2, mainly due to increasing geopolitical tensions in the Middle East impacting crude oil prices.
InterGlobe Aviation (IndiGo) shares have witnessed a fall by over 5%, while SpiceJet shares are down close to 4% in early trading as the ongoing conflict affects key transit points and raises worries about surging fuel costs.
The Iran–Israel conflict has resulted in the closure of significant airspaces in the Gulf region. Indian airlines, such as IndiGo, Air India, and SpiceJet, have canceled more than 350 international flights as of yesterday, with additional disruptions and technical stops (for instance, in Rome for North American routes) continuing into today.
As per reports, 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 usually represents 40% of an airline’s operational costs, making the industry particularly vulnerable to the recent spike in oil prices.
In order 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.
