Aviation Stocks Gain After Govt Increases Flight Capacity With Immediate Effect

On Thursday, shares of Interglobe Aviation Ltd. and SpiceJet Ltd opened higher after the Ministry of Civil Aviation allowed an increase in capacity of domestic flights. As per an official order on 2 September, the ministry said that "45 percent capacity may be read as 60 percent capacity," modifying its 26 June order wherein it had placed 45 percent cap on the number of domestic flights.

The new order to run at 60 percent capacity will be effective immediately, the order added.

Shares of Interglobe Aviation, the parent company of IndiGo Airlines, rose as much as 4.7 percent to Rs 1,306 on Thursday, up for the fourth straight day. Shares of Spicejet gained as much as 5.6 percent to Rs 53.7.

The government had permitted domestic flight to resume commercial operations starting 25 May after having been suspended for 2 months in light of the coronavirus pandemic. On the onset of resumption of operations, the government had permitted flights to be operated at one-third capacity. This was raised to 45 percent in late June.

The aviation sector is seeing a gradual recovery after being one of the worst hit industries by the pandemic. The Civil Ministry said that over 1.20 lakh passengers took to the skies across the country on 1 September, adding that domestic aviation operations continue to grow steadily.

As for international flights, the government has been operating special flights under the Vande Bharat Mission since May and under bilateral air bubble pacts signed with various countries since July.