NEW DELHI (Reuters) - More than $825 million was wiped off the value of listed Indian airlines on Thursday, after the government said it was restricting visit visas to halt the spread of coronavirus and investors worried that domestic travel would fade.
The government said on Wednesday it would suspend most visas to India, a country of 1.3 billion which has so far reported 73 cases of the virus and no deaths.
Shares in budget airline SpiceJet Ltd ended 20% lower on Thursday, as it launched discounted tickets offering prices as low as $13 one way on some routes to win business.
Rival IndiGo closed 12% lower, after the airline warned on profits because of a sharp fall in domestic bookings.
Airlines such as IndiGo, SpiceJet and premium carrier Vistara still earn most of revenues from domestic routes, but their international activity has risen as they have sought to fill the gap left by the collapse of Jet Airways Ltd.
International business accounts for a quarter of revenues and capacity at IndiGo, which has more than 250 planes. It has halted flights to China, Hong Kong and Qatar, and reduced flights to Vietnam.
It has redeployed some planes from international to domestic routes but might need to park some planes as domestic travel demand fades with the rising number of coronavirus cases in India, said one person with knowledge of the situation.
“Cutting capacity quickly is the answer. It’s all about conserving cash,” the person said.
IndiGo’s domestic passenger numbers are expected to decline by 6% in the April-June quarter, usually a busy travel period, against an industry fall of 5%, while its international passenger traffic is expected to dip by 7%, brokerage Centrum estimated.
Planes that airlines leave on the ground still rack up fixed costs but falling oil prices may provide some relief, said Nripendra Bahadur Singh at Frost & Sullivan.
SpiceJet, whose international operations account for 10% of capacity, has suspended flights to Hong Kong until March 28 and may need to reconsider flying to Thailand if demand continues to fall, a source with knowledge of the matter said.
Vistara has reduced flights to Singapore and Thailand, and had planned to use its first Boeing 787-9 Dreamliner plane, which it received last week, to fly to Japan but scrapped the plan due to the virus outbreak, an industry source said.
The airline, a venture between Singapore Airlines and India’s Tata Group, will fly the Boeing within India until the end of March and then consider long-haul destinations.
Vistara said in a statement that business on some of its international and domestic routes had been impacted but said it was flexible in its approach in dealing with the issue.
Reporting by Aditi Shah; Additional reporting by Derek Francis; Editing by Jamie Freed and Kenneth Maxwell