India’s aviation sector is experiencing robust growth, with domestic and international markets each expanding by 7% in the last year. In 2024, the market reached $14.47 billion and is projected to hit $40.81 billion by 2033. Air passenger traffic reached 174 million in 2024, and India is now the world’s third-largest domestic aviation market.
India’s aviation stocks face significant pressure following the tragic crash of an Air India Boeing 787-8 on June 12, en route to London from Ahmedabad, resulting in 241 fatalities. The incident raises serious safety concerns, potentially impacting consumer confidence, regulatory scrutiny, and operational credibility across Indian airlines and aviation stakeholders.
Additionally, Preliminary visuals indicate the Air India aircraft lost altitude soon after takeoff, crashing into a residential area. The cause remains unconfirmed, raising safety and regulatory concerns.
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Secondly, aviation stocks also declined amid heightened geopolitical tensions, as Israel’s strike on Iran’s capital, targeting nuclear-linked sites, triggered global risk aversion. Fears of retaliation and potential disruption to air routes and oil supply further pressured investor sentiment, compounding concerns already heightened by the recent Air India crash.
Additionally, geopolitical escalation in the Middle East drove Brent crude prices up 10% on Friday and 12% for the week’s sharpest rise since 2022. Fears of supply disruption intensified after Israel’s strike, with JP Morgan warning crude could hit $130 per barrel in a worst-case scenario, further straining global inflation and aviation costs.
IndiGo and SpiceJet shares fell 3.57% and 2% to ₹5,282.00 and ₹43.95, respectively, amid sectoral pressure. Broader markets also declined, with the Sensex dropping 710.52 points (0.87%) to 80,981.46 and Nifty losing 203.65 points (0.82%) to 24,684.55, reflecting widespread risk-off sentiment.
Written by Abhishek Singh
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