Aviation Stocks Drop; SpiceJet Tanks 5%

New Delhi, Apr 28 (PTI) Aviation stocks declined on Tuesday amid surging oil prices due to the West Asia turmoil, with Air India, IndiGo and SpiceJet telling the government that the country's airline industry is under extreme stress and on the verge of "stopping operations".

Shares of SpiceJet tanked 4.96 per cent to settle at Rs 14 on the BSE.

InterGlobe Aviation's stock declined 2.59 per cent to Rs 4,445.10.

Air India, IndiGo and SpiceJet have told the government that the country's airline industry is under extreme stress and on the verge of "stopping operations", as they sought revision in ATF pricing and financial support.

The West Asia turmoil has pushed up oil prices, and airspace restrictions have increased airlines' operating costs, especially on long-haul routes. Aviation Turbine Fuel (ATF) accounts for around 40 per cent of a carrier's operational expenses.


Against this backdrop, the Federation of Indian Airlines (FIA) has written to the civil aviation ministry, seeking steps to extend the same fuel pricing mechanism uniformly across both domestic and international operations as was done in the past with the establishment of the crack band.

With an unprecedented rise in jet fuel prices and exorbitant crack/differential between crude and ATF, the federation said the operation of airlines is being challenged in totality.

Brent crude, the global oil benchmark, jumped 3.48 per cent to USD 112 per barrel.

"... any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in unsurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights," the federation, which represents Air India, IndiGo and SpiceJet, said.

"In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide over the current situation," it said in a letter on April 26.

Also, the airlines have sought temporary deferment of excise duty on ATF, which is at 11 per cent.