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Airline stocks have gained around 1.5% to 4.5% extending gains from yesterday, as oil marketing companies slashed Aviation Turbine Fuel (ATF) prices by 12.5%. on Thursday, the steepest cut since July. Between October and December last year, jet fuel prices declined 11 per cent.
This is the first time in about four years when the price of aviation turbine fuel has dropped to about Rs 52,000 a kilolitre. In February 2011, the price of the fuel in Delhi was Rs 53,063 a kilolitre.
Fuel costs account for about 40 per cent of an airline’s operating expenses. Domestic airlines pay more for fuel than their regional peers, owing to state and central levies.
For airlines, hit hard by high fuel costs for much of 2013 and the first part of last year, the drop in jet fuel prices will mean lower operating costs. Last financial year, domestic airlines together posted a loss of about Rs 9,700 crore. However, with crude oil prices at about $60 a barrel, the outlook looks bright.
Jet Airways has gained over 4.5% to Rs 438.15 in BSE. The stock opened at Rs 428.25 and has hit a high of Rs 437.20 while around 3 lac shares have changed hands on BSE and NSE combined till 09:25 hrs.
SpiceJet has gained around 2% Rs 18.35 in BSE. The stock opened at Rs 18.30 and has hit a high of Rs 18.50 while around 13 lac shares have changed hands in BSE till 09:29 hrs. The stock is not listed on NSE.
