Budget 2016: Aviation stocks fall on proposed higher levy on ATF

Airline stocks fell by up to over 3% Monday as the government proposed a hike of 6% in excise duty on jet fuel in 2016-17 Union Budget presented by Arun Jaitley on Monday. 

Shares of SpiceJet went down by 3.42%, Jet Airways slipped 2.64% and InterGlobe Aviation fell by 2.50% on BSE.

Fliers will have to shell out more with the government proposing a hike of 6% in excise duty on jet fuel but it would not be applicable to the proposed Scheduled Commuter Airlines (SCAs) under the regional connectivity scheme.

The excise duty on Aviation Turbine Fuel (ATF) is to be hiked to 14% from 8%, according to a proposal in Budget 2016-17.

"Excise duty on ATF, other than for supply to Scheduled Commuter Airlines (SCA) from the Regional Connectivity Scheme Airports, (is) being increased.

"ATF for supply to aircrafts under the Regional Connectivity Scheme will continue to attract 8% excise duty," Finance Minister Arun Jaitley said while presenting the Budget.

Interestingly, the hike in excise duty also comes at a time when airlines have been seeking lower levy on jet fuel, which accounts for more than 40% of their total operating expenses.