The share price of three listed airline companies – Jet Airways, SpiceJet and Deccan Aviation (Kingfisher Airlines) – today witnessed a sharp spurt as state-owned oil companies cut aviation turbine fuel (ATF) prices by 16 per cent yesterday. The stocks rallied in the range of 2-4 per cent today on the domestic equity bourses.
The benchmark 30-share Sensex of the Bombay Stock Exchange (BSE) was down by 0.45 per cent, while the broader index, S&P CNX Nifty of the National Stock Exchange (NSE), declined by 0.26 per cent.
Indian Oil Corporation cut domestic jet fuel prices as international crude oil prices declined by a fifth from its lifetime high of over $147 a barrel in July last month.
According to market estimates, ATF contributes to over 40 per cent of airlines’ operating costs as the domestic jet fuel prices are among the most expensive on account of high taxes.
“The operating costs for airline companies have gone up over 56 per cent from September last year and hence the companies were suffering huge losses. Although the upside won’t be much, they are gaining as companies are not likely to cut airfares for a few months,” said a aviation analyst of a local brokerage house.
After the cut in ATF rates, SpiceJet, which operates around 94 flights a day, would be saving Rs 24 crore a month on fuel costs. Jet Airways, which operates 565 flights, would be saving Rs 60 crore and Deccan Aviation, currently operating around 400 flights a day, would be saving Rs 5 crore on fuel costs each month.
