IndiGo, SpiceJet & other travel stocks plunge up to 7%. Two big reasons why

Shares of travel-sector companies, including IndiGo, SpiceJet, ixigo, Yatra Online, and others, fell by as much as 7% on Monday after Prime Minister Narendra Modi urged citizens to avoid non-essential foreign travel for at least a year.

Following the development, Interglobe Aviation, the operator of IndiGo, declined over 4% to its day’s low of Rs 4,335. Fellow low-cost carrier SpiceJet dipped over 4% to its day’s low of Rs 13.41 on the BSE.

Booking platform stocks ixigo, Yatra Online, Thomas Cook, and Easy Trip Planners tanked up to 7% on Monday. Thomas Cook was the biggest laggard, hitting a day's low of Rs 91.94.


PM's advisory comes amid growing concerns over the economic impact of the ongoing West Asia conflict on global energy supplies, fuel prices, and supply chains.

“In this time of global crisis, we have to make a resolution keeping duty paramount and fulfil it with complete dedication,” the Prime Minister said. “A big resolution is to use petrol and diesel sparingly. We must curb our use of petrol and diesel.”

Drawing parallels with the Covid-19 pandemic period, PM Modi said India had already successfully adapted to remote working systems, online meetings and virtual conferences, and suggested that these practices should once again be widely adopted “in the national interest” to reduce fuel consumption linked to commuting and business travel.

Another big factor dragging travel stocks lower is soaring crude oil prices. After last week's drop, prices climbed to clinch $105 per barrel after US-Iran peace talks faltered yet again. Rising crude oil prices directly increase aviation turbine fuel (ATF) costs, which form a major part of operating expenses for airlines like IndiGo and SpiceJet. Higher fuel bills pressure margins, especially when ticket prices cannot be raised immediately. A weaker rupee further worsens costs since fuel payments and aircraft lease liabilities are dollar-linked, impacting profitability and cash flows across the aviation sector.

For travellers, soaring oil prices usually translate into higher airfares as airlines pass on rising fuel costs through fare hikes and fuel surcharges. For travel companies, higher oil prices can slow travel demand as rising airfares and holiday costs discourage discretionary spending. Fewer flight and hotel bookings can weigh on transaction volumes and commissions.

The Prime Minister also urged citizens to help conserve foreign exchange reserves by avoiding non-essential overseas travel and postponing discretionary spending on gold for at least a year. Modi encouraged people to prefer domestic tourism and hold weddings and celebrations within India, saying reduced demand for imported fuel and gold would help cushion the economy against global volatility triggered by the West Asia conflict.

“The growing culture of weddings abroad, travelling abroad and vacationing abroad is becoming prevalent among the middle class. We must decide that during this time of crisis, we should postpone travelling abroad for at least a year,” Modi said.

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He warned that prolonged disruptions in global supply chains due to geopolitical tensions would continue to increase economic difficulties despite domestic policy measures. He said citizens must place “the country and Mother India first” and understand that patriotism also involves fulfilling civic and economic responsibilities during difficult times.

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