IndiGo shares jump over 9%, SpiceJet also rises: Why aviation stocks are rising even as jet fuel prices more than double

The fuel price has been hiked, given the surge in global oil prices linked to the widening West Asia conflict.

The ATF price in Delhi was hiked by ₹110,703.08 per kilolitre, or 114.5%, to Rs 207,341.22 per kl, according to state-owned fuel retailers.

ATF, being a completely deregulated product, is priced at prevailing benchmark international prices. This is as per a written understanding with the airlines.

So the new rates will apply for any international airline refuelling in India from Wednesday, the PTI report said, quoting industry sources.

Domestic airlines will, however, not have to pay the steep rates, as a mechanism is in works to not pass on the entire burden to them, they said.

"It wasn't immediately known how much domestic airlines will have to pay and how much will be absorbed in some other form. No formal announcement of the mechanism has been made so far," the report said.

This is the first time ever that the ATF price has crossed the ₹2 lakh per kl. mark. The previous peak was in 2022 when rates were hiked to ₹1.1 lakh per kl after oil prices surged after Russia invaded Ukraine.

This is the second monthly increase in rates. Prices on March 1 were hiked by 5.7% (₹5,244.75 per kl).

The rise in fuel prices is expected to further strain airlines, which are already consuming more fuel due to longer flight routes to Western destinations following airspace closures amid the conflict. With fuel accounting for nearly 40% of an airline’s operating costs, the combined impact of higher prices and extended flying times is likely to significantly pressure margins.

How shares are performing

Interglobe Aviation shares rallied as much as 9% to ₹4,298.90 apiece on the NSE, while SpiceJet's shares were up nearly 4.5% at ₹10.17 on the NSE.

IndiGo: Another key update

Shares of IndiGo were in the green also because of the appointment of a new CEO.

The country's largest airline IndiGo on Tuesday announced the appointment of former British Airways chief William Walsh as new CEO. Walsh, an airline industry veteran, is currently the director general of the International Air Transport Association (IATA).

Walsh, popularly known as Willie, was formerly CEO of British Airways and IAG (International Airlines Group, a holding company, which owns Aer Lingus, British Airways, Iberia, Level, and Vueling). "As we enter a new phase of transformation and growth, I am delighted to welcome Willie to IndiGo.