How the global airline industry behaved to restrictions on air travel to India? An event study analysis

Abstract

We examine the impact of the recent restrictions/bans imposed by several nations on air travel to India in the light of the increasing number of infections amid the second wave of covid-19. We employ the standard event study method on a sample of 34 airline stocks across seven nations to find that the recent restrictions/bans on air travel significantly impact the global airline industry, although the country-specific impacts are not similar. We find that the post-event reaction in all nations has been different from those evidenced during the global pandemic declaration. We are the first to examine these impacts during the current wave of the pandemic. It contributes to the literature on the effects of the pandemic on the global airline industry. Further, it also provides practical explanations to the investors on how the airline stocks react to the persistence of the pandemic.