Markets News

DGCA raises cap on air fair, SpiceJet shares climb up to 4%

On February 12, the share price of SpiceJet jumped over 4 percent and that of Interglobe Aviation, which operates Indigo, gained over 2 percent.

The floor and ceiling prices of fares that airlines can charge have been revised by the government and the cap will be effective till March 31st.

The minimum fare on all seven sectors is increased by 10-12 percent and the limit on maximum fare is raised by around 30 percent.

Also, the domestic air traffic on February 10 was at 67 percent of the average daily domestic traffic seen in 2019.

SpiceJet stock gained 7.18% to Rs 94 against previous close of Rs 87.70 on BSE and opened with a gain of 6.27% at Rs 93.20.

As per CNBC-TV18 report, the seven sectors have been classified on the basis of the duration of flight.

With uncertain demand sentiment, this order came at a time when airlines are staring at a traditionally weak quarter of January-March.

However, due to Covid 19 restrictions, the revised fares come as a respite to the airline industry.

It is to be noted that brokerage firm Prabhudas Lilladher has increased IndiGo’s FY22/FY23 earnings by 7.5 percent/ 7.1 percent.

It also assigned an accumulate rating with the target price of Rs1,780, given sustained scaling up of operations, broad- based recovery in domestic demand.

Moreover, this is aided by non-metro cities and improving load factors on the back of rising consumer confidence.

The share trades higher than 5 day, 20 day, 100 day and 200 day moving averages but lower than 50 day moving average respectively.


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