With ATF rate hike of 16.3 percent on Thursday, jet fuel prices have doubled in 2022. This has put aviation stocks, Spicejet and InterGlobe Aviation, under pressure.
Airline stocks came under pressure on Thursday after aviation turbine fuel (ATF) prices were hiked 16.3 percent to a record high
of Rs 1.41 lakh per kilolitre. Jet fuel prices have been up 91 percent in the past six months and, according to analysts, they form over 40 percent of the operational cost for airlines.
At the time of updating this copy at 1:00 pm, Spicejet was down over six percent while InterGlobe Aviation (Indigo) had fallen over four percent. To put it in context, the Nifty and the Sensex, the benchmark indices, are trading approximately a percent in the red.
"Aviation turbine fuel prices have increased by more than 120 percent since June 2021. This massive increase is not sustainable and governments, central and state, need to take urgent action to reduce taxes on ATF that are amongst the highest in the world," said Ajay Singh, Chairman and Managing Director, SpiceJet.
Singh said that Spicejet has tried to absorb the burden of the fuel price rise, but the weakening of the Indian rupee against the US dollar further has dented their balance sheets.
"The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares, and we believe that a minimum 10-15 percent increase in fares is required to ensure that cost of operations are better sustained," he said.
(Edited by : Abhishek Jha)
First Published: Jun 16, 2022 11:02 AM IST