Indian Airlines Hit Hard as Crude Oil Prices Soar Above $95
Indian airline stocks IndiGo and SpiceJet are continuing their downward trend due to rising crude oil prices. On Wednesday, Brent crude jumped 1% to $95.60 a barrel, its fourth gain in five sessions, amid escalating tensions between the US and Iran.
The price increase is expected to put pressure on airline margins as fuel accounts for nearly 40% of an airline's operating costs. The latest hike in Aviation Turbine Fuel (ATF) prices was announced earlier this week, marking the second consecutive monthly increase.
Domestic ATF prices rose by Rs 6.28 per litre to Rs 121.28 per litre from Rs 115 per litre, a 5.46% increase. This rise follows an earlier 7.5% hike in August, and airlines are finding it challenging to fully pass on higher fuel costs to passengers.
InterGlobe Aviation, the parent company of IndiGo, was trading at Rs 4,942.50 on the NSE, down 2.17%. SpiceJet shares were trading at Rs 9.72 on the BSE, down 2.70%.