SpiceJet, InterGlobe Aviation Shares Fly Following Fuel Price Cut; Details
Airline operators InterGlobe Aviation and SpiceJet shares flew upwards of five per cent during the early session on October 1, as oil marketing companies slashed the price of aviation turbine fuel (ATF). The rates have been slashed by Rs 5,883 per kilolitre. The new rates will be implemented effective today.
In the previous month, the center also slashed the ATF rate by Rs 4,495.48 per kilolitre. In Delhi, the rate is Rs 87,597.22 per kl.
At 9.20 am, Indigo operator InterGlobe Aviation shares were quoting Rs 4,840 on the NSE, higher by a percent. SpiceJet’s stock price jumped over five percent to trade at Rs 67.2 apiece.
ATF is not covered by GST, instead it is taxed at the state level, with excise duty and VAT applying. These taxes differ between states, driving up operational expenses for industries like airlines, which have pushed for standardized taxes. In some states, VAT on ATF can reach as high as 30 percent.
Domestic airlines had requested the inclusion of jet fuel or aviation turbine fuel (ATF) under the goods and services tax ahead of Budget 2024, which would enable them to claim input tax credit, thereby reducing overall expenses.
Jet fuel accounts for nearly 40 percent of the total expense for domestic airlines. A reduction in ATF will also bring down ticket prices.
Aviation consultancy CAPA India has also been asking the government to come up with a new policy in the backdrop of the rapid changes the industry has seen after the COVID outbreak.
Brokerage Take
Interglobe Aviation stock has run-up sharply in the past one year and has delivered multibagger return. The stock technically has RSI below 50 suggesting a likely bearish trend in the counter.
Brokerage firm Motilal Oswal said IndiGo is striving to improve its international presence through strategic partnerships and loyalty programs. It served 106.7m customers in FY24, with a net increase of 63 aircraft. The company has eight strategic partners with a 27 per cent international share in terms of ASKs in FY24.
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