The families of the victims of the Air India crash are demanding answers, and a British coroner has now called for an international inquiry. For the City of London, this is not just a tragedy. It is a reminder that when markets move, they do so on the back of confidence.
And confidence, like an aircraft's fuselage, is fragile. The coroner's call for a multinational investigation suggests that the initial explanations have failed to satisfy. That is a problem.
Uncertainty is the enemy of capital. It drives up insurance premiums, it delays investment, and it makes treasurers nervous. We have seen this before.
After the 2014 MH17 disaster, it took months for the aviation sector to regain its footing. The shares of Air India's parent company have already taken a hit. But the real concern is the broader implications for India's aviation market, which has been growing at double-digit rates.
If this inquiry drags on, it could clip the wings of that growth. The gilt market, too, is watching. A prolonged investigation could signal governance issues that spook foreign investors.
And when foreign investors get jittery, they pull capital. That means a weaker rupee and higher borrowing costs for Indian corporates. The coroner's intervention is a double-edged sword.
It may bring answers, but it will also bring scrutiny. And scrutiny, in the current climate, is rarely welcome.
