Shares of airlines including IndiGo parent InterGlobe Aviation, SpiceJet, Global Vectra, and Jet Airways, rose after the price of aviation turbine fuel (ATF) was reduced by 12 percent on Monday.
Jet fuel is now priced at Rs 1.21 lakh per kilolitre in Delhi, according to updated rates on the Indian Oil website. The drop in the price of jet fuel comes two weeks after the price was brought down to Rs 1.38 lakh per kilolitre, following an all-time high price of Rs 1.41 lakh per kilolitre in June, after a 16 percent hike.Following Monday’s price cut, SpiceJet shares advanced almost 2.5 percent in early trade. Though the stock has risen marginally in the past month, it has erased more than 40 percent of investors’ wealth in 2022 (year-to-date) as against the benchmark Sensex which has dropped 2.4 percent during the period.
Though Jet Airways is yet to resume operations, its shares jumped more than 3 percent in intraday trade and trade 1.3 percent higher at Rs 104.50 on BSE at 9:50 am.Shares of IndiGo and Global Vectra did not rise as much but were trading in the green. IndiGo’s stock was up 0.3 percent and the latter’s rose 0.2 percent.If the jet fuel price cut will lead to a reduction in airfares remains to be seen as the cost of aviation turbine fuel accounts for 50-55 percent of the entire cost of airlines. Aviation companies have reportedly lost thousands of crores rupees due to high jet fuel prices.
Aviation stocks will have a healthy effect on margins for this quarters because due to multiple holidays in coming months till December end, fliers would have booked tickets in advance which would be at higher prices while fuel cost going down in coming weeks would lead cost benefit for aviation industry.Independent market expert Kush Ghodasara is of the view that aviation stocks will have a healthy effect on margins for this quarter. “With multiple holidays in coming months till December end, fliers would have booked tickets in advance which would be at higher prices while fuel cost going down in coming weeks would lead cost to benefit for the aviation industry,” he told CNBCTV18.com.
