Airlines stocks rise on ATF cut

MUMBAI: Airline shares rose on expectations that the cut in aviation turbine fuel (ATF) would enable them recoup recent losses. Also, investors are hoping that the recent cut in fares by airline companies would help lure the country's middle-class, who shifted to travelling via rail in the last six months due to the sharp jump in airfares.

Between 2005 and 2007, passenger traffic had shot up, as the introduction of low-cost carriers coupled with India's economic boom had resulted in many train travellers shift to air. Analysts, however, feel it would be difficult to revive the same kind of passenger traffic, as seen in 2005-07, atleast over the next couple of years because of the slowdown in the economy.

At 2:00 PM, shares of Jet Airways, Kingfisher Airlines and SpiceJet gained 2.7%, 4% and 3% respectively. The Sensex was up 110 points or 1.15% at 9,757 at 1.30 PM.

State-owned oil companies on Wednesday 31 December 2008 cut aviation turbine fuel (ATF) prices by 6.8%, making it the eighth straight reduction since September 2008. The jet fuel rate in Delhi has been cut by Rs 2,234 to Rs 30,457 per kilolitre.