The move is part of the nationwide lockdown that the government has imposed to stem the spread of coronavirus that threatens Prime Minister Narendra Modi’s attempts to revive the economy, which has already been expanding at the slowest pace in more than a decade. Earlier, India had banned international flights for a week on March 20.
PM Modi joined chief ministers in urging people to take the lockdown in 30 states and Union Territories seriously, even as 75 new cases of Covid-19 were dectected on Monday, taking India's total number of cases to 492 — more than double the number on March 20.
Studying the impact, analysts at JP Morgan said the airspace closure may persist for even longer basis the situation which may lead to a sharp decline in IndiGo
June and September quarter earnings.
In the backdrop of the outbreak of coronavirus we revisit our air traffic growth estimates. Our base case is a sharp slowdown in Q1FY21 and recovery starting Q2FY21 leading us to estimate 9.2 per cent/4.2 per cent domestic/international pax growth for Indian airlines in FY21E, wrote analysts at Centrum Broking in a note.
While the analysts expect IndiGo's Q4FY20E earnings to be impacted by fx MTM loss of Rs 5.7bn (at Rs73.5/USD), they it’s robust balance sheet and competitive cost structure to put it in a
position of strength once growth recovers. The brokerage has 'Buy' rating on the stoock with a revised target of Rs 1,505.
Aviation is one of the worst affected sectors amid the Covid-19 crisis that has taken the scale of a pandemic. "According to the International Air Transport Association, airlines globally can lose in passenger revenues of up to $ 113 billion due to this crisis. Airfares have also come under pressure due to nearly 30 per cent drop in bookings to virus affected destinations. As a result, airfares to such destinations have fallen by 20-30 per cent," industry body Federation of Indian Chambers of Commerce & Industry (Ficci) said in its latest report.
"According to the data available with the Ministry of Civil Aviation, nearly 585 international flights have been cancelled to-and-from India between February 1 and March 6 because of the outbreak of coronavirus. Cash reserves of airline companies are running low and many are almost at the brink of bankruptcy," the report said.