ATF Price Hike: Aviation stocks feel the heat! SpiceJet hits 52-week low; IndiGo, Jet Airways drop up to 4%

Aviation stocks declined up to five per cent in Thursday's intraday trade after oil marketing companies resorted to 16% steep hike in ATF prices. The new rate has come into effect from Thursday, June 16, 2022.  

Reacting to the development, shares of SpiceJet dropped over five per cent to a 52-week low of Rs 41.60 per share on the BSE. The counter traded on a 52-week high value of Rs 87.25 apiece on November 24 last year on the BSE.  

Meanwhile, InterGlobe Aviation (IndiGo) dropped over four per cent to Rs 1658 share, while Jet Airways decline more than one per cent to Rs 103 apiece on the BSE.  

After the sharp hike in ATF prices, SpiceJet on Thursday called for 10-15 per cent hikes in airfares to sustain the operation. 

Demand for fair price hike  

There is no option left other than to hike airfare by 10-15 per cent to meet the operation cost of airlines. Continued trend of the weakening of Indian rupees against US dollar (USD) and going up of air turbine fuel (ATF) prices leave no choice, but to increase air ticket prices," said SpiceJet Chairman and Managing Director (CMD) Ajay Singh Bagga, adding Aviation turbine fuel prices have increased by more than 120 per cent since June 2021.    

ATF price in metro cities 

Earlier, with the revision of ATF prices, the jet fuel rate climbed to a record level, costing Rs 141232.87 per kilolitre (Kl), a hike of Rs 19757.13 per kl, in the national capital from June 16. The same cost Rs 121,475.74 per kilolitre in Delhi before this rate hike. This is a jump of 16.2% on June 1 prices.  

In Kolkata, one kilolitre ATF will now cost Rs 1,46,322.23, Rs 140,092.74 per kl in Mumbai and Rs 146,215.85 per kl in Chennai. 

Average daily fliers remain healthy in June 

Earlier in its report on June, brokerage firm ICICI Securities said that average daily fliers numbers remain healthy for the sector. It stood at 375k for the month of June 22-TD vs 368k for the month of May’22.  

"Yields will be tested in Q2FY23 against seasonally weak period (could be different in FY22 due to pent-up demand) and some improving capacity. Indigo expects to clock 55-60% YoY growth in ASK in FY23; Q1FY23 ASK is expected to be 2.5," the brokerage had said.