Airfare may go up by 20%; SpiceJet, Jet Airways gain

NEW DELHI: Shares of airline companies surged on reports of hike in aviation turbine fuel (ATF) price may lead to ticket price hike up to 20% in most major airline companies.

On Monday, state-owned oil companies today hiked jet fuel prices by a steep 3.8 per cent. The price of aviation turbine fuel (ATF), or jet fuel, at Delhi's T3 airport was raised by Rs 2,845 per kilolitre (kl), or 3.8 per cent, to Rs 61,115 per kl.

Jet fuel makes up for 40 per cent of an airlines' operating cost and the steep hike in prices will raise burden on the cash-strapped airlines.

However, most analyst are of the view that, the recent hike in jet fuel price will lead to ticket price hike up to 20%. Analysts have also indicated that management of the airline companies are also eyeing an airfare hike depending on the route

Shares of SpiceJet Ltd closed 6.5% higher at Rs 25.35. The stock has hit a high of Rs 26.20, a rise of over 10% in trade so far.

Shares of Jet Airways ended 1.15% higher at Rs 255.70. It has hit a high of Rs 264.20 and a low of Rs 248.10.

However, most analysts believe the upsurge in stock prices of aviation companies is more of a technical bounce back. But hike in airfare will bode well for these companies.