Aviation stocks soar on fuel price cut

Aviation stocks were flying high on Tuesday as the State-run oil retailers cut the price of aviation turbine fuel (ATF) for the second time in a week.

Indian Oil Corporation cut jet fuel prices by 17 per cent last week and again by another Rs 2,100 a kilolitre on Monday.

The price cuts came after the Government decision on Friday to abolish the five per cent customs or import duty on jet fuel.



The share price of Spicejet gained 4.83 per cent on Tuesday to close at Rs 13.46; Jet Airways climbed 6.23 per cent to close at Rs 203.65 and Kingfisher Airlines closed at Rs 35 gaining 3.55 per cent.

“The cut in fuel prices will result in a fall in the operating costs of the airline companies and therefore increase their profitability,” said an analyst with a stock broking firm.

According data available on the Indian Oil Corporation Web site, the ATF prices in Delhi, Kolkata, Mumbai and Chennai are now between Rs 44,965.7 and Rs 53,663.53 a kilolitre. This means an average decrease of 19.7 per cent from what they were a month back.

The price of ATF had increased almost 60 per cent between April and September.

Marketmen said that the benefits of the reduction in jet fuel prices will only be known over a period of time, though in the short-run this would give some lift to the dwindling bottom lines of the airline carriers.

In the past week, the shares of Spicejet and Kingfisher Airline surged 15 per cent while that of Jet Airways shot up 32 per cent.

Source: TheHinduBusinessLine