New Delhi: Aviation stocks oared on Wednesday, with InterGlobe Aviation climbing over 8 per cent, despite jet fuel price hike.
The shares of InterGlobe Aviation, the parent firm of IndiGo, were trading with 8.17 per cent gains at Rs 4,265.50 apiece at the time of writing this article. The stock of SpiceJet surged 3.70 per cent to Rs 10.10.
ATF price more than doubles
On Wednesday, the price of Aviation Turbine Fuel (ATF), or jet fuel, jumped more than 100 per cent to a record Rs 2.07 lakh per kilolitre. The hike was sue to the surge in global oil prices. However, for domestic airlines, the ATF prices have been hiked by only 8.5 per cent.
For domestic airlines jet fuel prices have gone up by Rs 110,703.08 per kl, or 114.5 per cent, to Rs 207,341.22 per kl.
The Jet fuel prices were deregulated in 2001, and since then, the rates are aligned with benchmark international prices, as per a written understanding with the airlines.
However, the US-Israel and Iran war has led to a huge surge in global energy prices which led to the increase in the ATF prices.
However, the government and state-owned oil companies decided to adopt a calibrated approach. In consultation with the Ministry of Civil Aviation, PSU oil marketing companies decided to implement only a partial and staggered increase of 25 per cent or Rs 15/litre for domestic airlines.
However, foreign airlines and other carriers would pay market rates. Fuel makes up for around 40 per cent of an airline’s operating cost.
SpiceJet chief says partial ATF price hike to provide significant relief
SpiceJet Chairman and Managing Director Ajay Singh welcomed the government’s decision to allow only a partial increase in jet fuel prices. “The government’s decision to allow only a partial increase in Aviation Turbine Fuel prices comes as a significant relief for the Indian aviation industry at a time of unprecedented global uncertainty,” Singh said.
IndiGo also got the boost as the country’s largest airline IndiGo announced the appointment of William Walsh as its next CEO.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds)