Spice Jet surged 4.5% on the Bombay Stock Exchange (BSE) on Tuesday, extending Wednesday's sharp rally after state-run oil marketing companies on Tuesday announced reduction in the price of aviation turbine fuel. Also the airline claimed that it recorded 220,000 bookings on Tuesday, as customers lapped up tickets with a base fare of Re 1. Typically, the airline sells 40,000 seats a day.
At 1415 hrs, SpiceJet stock was up 4.3% at Rs 18.05. A total of 13.2 million shares changed hands on the BSE against its 30-day average volume of 2.4 million.
Meanwhile, the S&P BSE Sensex was down 98.98 points or 0.44% at 22,452.51.
SpiceJet had outperformed the market over the past one month till 2 April 2014, advancing 31.83% compared with the Sensex's 6.78% rise. The scrip had, however, underperformed the market in past one quarter, sliding 9.34% as against Sensex's 7.96% rise.
The state-run oil marketing companies on Tuesday, 1 April 2014, announced reduction in the price of aviation turbine fuel (ATF), reflecting global trends. ATF price at Delhi was cut by Rs 3,025.34 per kl, or 4%, to Rs 71,800.21 per kl. In Mumbai, jet fuel costs Rs 74,105.16 per kl as against Rs 77,322.6 per kl previously. Rates at different airports vary because of difference in local Sales Tax or VAT.
Jet fuel constitutes over 40% of an airline's operating costs and the price cut will reduce the fuel cost of the cash-strapped carriers.
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Also, SpiceJet claimed it recorded 220,000 bookings on Tuesday, as customers lapped up tickets with a base fare of Re 1. Typically, the airline sells 40,000 seats a day. On Tuesday, it had a fare of Re 1 for one or two seats a flight, less than two per cent of its daily inventory.
“We had 220,000 bookings today (on Tuesday), by far the highest for SpiceJet in a single day. This is despite the website crashing, as visits increased 3,000 per cent; we had only expected and planned for an increase of four-five times,” Chief Operating Officer Sanjiv Kapoor wrote in an email to employees.
As a single booking could include more than one seat, it is possible the airline sold at least 220,000 seats on Tuesday. SpiceJet did not disclose how many of the bookings were for Re 1 fares. On Tuesday, the airline launched discount fares ranging from Re 1 to Re 1,499 but was forced to halt the scheme, after the Directorate General of Civil Aviation (DGCA) said the Re 1 scheme was misleading flyers. DGCA added even as passengers were lured to the cheap tickets, they weren’t informed about the limited inventory (only two per cent of the total tickets).