IndiGo, Ixigo, Yatra: Tourism-linked company shares tank amid Middle East tensions, airport closures

Shares of companies linked to the tourism sector, such as aviation stocks like InterGlobe Aviation and Spice Jet, hotel stocks like Indian Hotels, Chalet Hotels and more, declined.

The stock of travel proxies and booking companies, including Yatra, Le Travenues Technology, was also trading in red on the National Stock Exchange (NSE) following the developments in the Middle East over the weekend.

Why have tourism stocks declined?

Over the weekend, the United States and Israel launched an attack on Iran, which led to the death of its Supreme Leader, Ayatollah Ali Khamenei. In retaliation, Iran attacked US and Israeli airbases across West Asia.

Israel launched a new wave of strikes on Tehran on Sunday, and Iran responded with more missile barrages.

The escalating hostilities in the region have led to flight cancellations and airspace closures. The Dubai International Airport, one of the busiest in the world and a major tourism hub, along with Kuwait's main airport and Abu Dhabi Airport, continue to remain closed, with over ten thousand passengers stranded.

IndiGo announced that it will not operate flights to and from the Middle East due to the situation in the region and the airport closures. It also cancelled flights to the Middle East, Europe, and the UK.

Oil price surge

Aviation stocks are largely sensitive to an increase in oil prices, as aircraft fuel and oil account for a substantial 28.7% of total airline costs, according to WATS.

ICE Brent Crude futures for May delivery rallied as much as 13.03% to a 52-week high of $82.37 per ounce, following the geopolitical tensions in the Middle East.

Stock performance

Just two constituents of the 30 share NIFTY India Tourism index were trading in the positive territory.

Shares of InterGlobe Aviation, the parent company of IndiGo, fell as much as 6.78% to an intraday low of ₹4,500 per unit on the NSE.

The stock of Le Travenues Technology (Ixigo) declined as much as 5.15% to the session’s low of ₹161.59 per equity share, while Yatra Online tanked 9.07%.

The Indian Hotels Company's share slipped by 4.17%, and Chalet Hotels slumped by 4.71%.