SpiceJet, Jet Airways stocks skyrocket as Delhi govts mulls massive cut in ATF tax

NEW DELHI: Shares of aviation stocks soared up to 6 per cent in Wednesday’s trade amid reports that the Delhi government will cut tax of air turbine fuel (ATF) to 1 per cent from 25 per cent in a bid to boost connectivity between the capital and northeast areas.

At 2.17 PM, SpiceJet was ruling 5.58 per cent higher at Rs 79.45. Jet Airways surged 5.56 per cent to Rs 461, while InterGlobe Aviation advanced 3.45 per cent to Rs 890. ATF fuel accounts for a major portion of airline operators’ revenues.

Credit rating agency ICRA expects Indian Aviation Industry to report 22 to 23 percent passenger traffic growth in FY2017 supported by ongoing low airfare regime.

The airlines are maintaining healthy PLFs backed by low airfares, ANI reported.

However, since the ATF prices have been on an uptrend during the year, the impact on profitability of the airlines during Q4 FY2017 is inevitable as average ATF prices during the quarter are 37.9 percent higher YoY, while the yields continue to remain under pressure, ANI quoted ICRA as saying.

As per ICRA estimates, the fuel cost per ASKM (CASK) of the domestic aviation industry increased to Rs. 1.16 in January 2017 from a low of Rs. 0.82 in February 2016, and the same is expected to increase further in February and March 2017.