Aviation stocks rise as govt allows airlines to increase capacity

Shares of two listed aviation companies - InterGlobe Aviation and SpiceJet – rallied up to 5 per cent on the BSE on Thursday after the government allowed airlines to increase flights up to 60 per cent of their total capacity.

The stock of the country’s largest passenger airline InterGlobe Aviation, which operates its flights under the IndiGo brand, rallied 4.50 per cent to Rs 1,304.20 on the BSE. At 10:08 am, it was trading 1.37 per cent higher at Rs 1,265 as compared to a flat S&P BSE Sensex.

The stock of the budget carrier SpiceJet surged 5.60 per cent at Rs 53.70 on the BSE. Around a combined 22.6 lakh shares have changed hands on the counter so far, the exchange data shows.

Aviation regulator Directorate General of Civil Aviation yesterday issued the order to increase the capacity against the previous cap of one-third capacity.

Indian airlines resumed domestic operations from May 25 after being grounded for two months due to the lockdown to contain the Covid-19 pandemic.

A senior government official told Business Standard that data had proved that air travel was the safest mode of transport due to its controlled access and complete traceability at departure, transit, and arrival. Less than 1 per cent of people who took a flight since May 25 have been detected carrying the virus, he said.

Moreover, overseas flights can resume only when a substantial portion of the domestic routes are functional. International routes depend on traffic feed from domestic flights.