Air Asia’s
possible entry into India’s domestic civil aviation market on Thursday caused
selling pressure on SpiceJet and Jet Airways stocks as these airlines along
with others are expected to face pricing pressure going ahead, said an analyst.
The SpiceJet stock lost the most as the airline is believed to be bearing the
maximum brunt as it had already laid out an elaborate regional network in the
southern part of India where Air Asia would be concentrating to begin with. Air
Asia has said that Chennai would be the base of its domestic airline.
As investors
turned negative, SpiceJet shares plunged to close with a loss of 6.55 per cent
at Rs.37.80.
Jet Airways, India’s
second biggest airline group by market share, also witnessed erosion of its
market cap as its stock plunged 4 per cent to close at Rs.559.90 on the Bombay
Stock Exchange.
“These shares
will correct further. Today the trigger was the Air Asia news. Air Asia’s
imminent entry with the Tatas will enhance the price war as they have deep
pockets. The delay in the Etihad deal is also affecting the Jet Airways stock,”
said Ambareesh Baliga, an independent stock analyst.
The entry of Air
Asia may be beneficial for air passengers as it would keep airfares low, but it
does not auger well for the financial health of India’s loss-making airlines
which recently turned into profit by jacking up airfares following the exit of
Kingfisher. On Tuesday, Jet Airways had announced the sale of two million cheap
tickets indicating desperation by airlines to fill its seats. Any further
pricing pressure on the yield has been viewed as negative.
On the other
hand, the Kingfisher Airlines stock gained 4.98 per cent to close at Rs.11.60
on a day when the BSE Sensex plunged 317.39 points (-1.62 per cent) to close at
19325.36. Kingfisher stock has been gaining with the hope that it would be
revived shortly despite banks raising a red flag.
http://www.thehindu.com/business/Industry/spicejet-jet-airways-shares-plunge/article4439607.ece
IndiGo allowed to
import aircraft New Delhi, Feb 21:
The proposal of
the Delhi-based low cost airline, IndiGo to import 11 aircraft has been
approved by the Government.
Sources indicated
that while IndiGo has been given a No Objection Certificate to import 11 Airbus
A-320 aircraft.
The import of
aircraft is first approved by the Aircraft Acquisition Committee (ACC) in the
Ministry of Civil Aviation first after which the proposal is cleared by the
approving authority, the Minister for Civil Aviation before actual import is
allowed. The ACC is headed by the Additional Secretary and Financial Advisor in
the Ministry.
The decision
comes even as there have been reports that the Government has been delaying
import of aircraft of various airlines.
http://www.thehindubusinessline.com/industry-and-economy/logistics/indigo-allowed-to-import-aircraft/article4438826.ece?ref=wl_banking
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