SpiceJet Flies 5% While IndiGo Hits Turbulence As Airlines Urge Fuel Retailers To Delay Price Hike 

Mumbai, May 19: Shares of SpiceJet surged on Tuesday while InterGlobe Aviation, the parent of IndiGo, edged lower after a report said Indian airlines had urged state-run oil refiners to postpone any increase in jet fuel prices amid mounting cost pressures from elevated crude oil prices.

According to a Bloomberg report, airlines including Air India, IndiGo and SpiceJet have requested oil marketing companies to defer a planned hike in aviation turbine fuel (ATF) prices for domestic flights until geopolitical tensions in the Middle East ease. The proposal is currently being considered by refiners such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, with the government also involved in discussions.

Possible Hike

The development comes as state-run refiners are evaluating a possible increase of up to 25% in domestic jet fuel prices from June 1. ATF prices in India are already elevated, with refiners reportedly incurring losses on domestic aviation fuel sales after global crude oil prices surged following the Iran conflict.

IndiGo saw volatile trade on May 19 with shares rising and falling as investors showed caution amid rising costs and slowing demand. Source: NSE

SpiceJet shares gained five per cent at Rs 12.71 as investors bet that any delay in ATF price hikes could offer relief to financially stressed airlines, especially smaller carriers with weaker balance sheets. Fuel accounts for nearly 40% of airline operating costs, making changes in ATF pricing a critical profitability trigger for the sector.

Some Turbulence

IndiGo shares, however, traded 0.5% lower at Rs 4,252 despite the potential relief measures, as investors remained cautious about rising operating costs and slowing demand conditions. While IndiGo is operationally stronger than peers, elevated crude prices, rupee weakness and disruptions to international flight routes continue to weigh on sentiment around the aviation sector.

The aviation industry has been under pressure for weeks amid the sharp spike in oil prices linked to tensions in West Asia. Earlier this year, the Federation of Indian Airlines, representing carriers including IndiGo, Air India and SpiceJet, warned the government that soaring fuel costs could severely hurt operations and profitability if pricing support was not provided.

Brief Relief

ATF prices for domestic airlines were kept unchanged in May after government intervention, offering temporary relief to carriers. However, international ATF prices have continued to rise sharply, forcing airlines to either absorb higher costs or partially pass them on through fuel surcharges and higher ticket prices.

Investors will now closely track the government’s decision on domestic jet fuel pricing, movement in crude oil prices and passenger demand trends for further cues on airline stocks.

Source:
https://www.nseindia.com/get-quote/equity/INDIGO/InterGlobe-Aviation-Limited, https://www.nseindia.com/get-quote/equity/SPICEJET/SPICEJET-LTD