Jet fuel prices were raised for the fifth time in as many months on June 30, with the latest increase of 5.5 percent following a steep hike of 9.2 percent on June 1. Jet fuel prices account for 30 to 35 percent of operating costs for airlines and directly impact profit margins.
In a press statement issued on Thursday, state-run Indian Oil Corporation (IOC) said that jet fuel (also called aviation turbine fuel, or ATF) prices have been increased to Rs. 49,287.18/kilolitre in Delhi with effect from June 30 midnight.
The pre-hike price was Rs. 46,729/kl, translating into a rise of Rs. 2,558/kl, or 5.47 percent. In foreign currency, the price was fixed at $518/kl in Delhi from $494 earlier.
In five increases, ATF prices have jumped by 25 per cent, or Rs. 9,985.87, per kl since March, reported PTI on Friday.
The share prices of airlines such as Jet Airways, SpiceJet and IndiGo-parent Interglobe Aviation ended with losses. SpiceJet was down 0.69 percent, Jet Airways fell 1.19 percent, while Interglobe ended with moderate losses of 0.26 percent on Friday on the Bombay Stock Exchange (BSE).
Indian Oil Corporation shares jumped 7.35 percent to close at Rs. 473 apiece on the BSE. Shares of other state-run oil marketing companies also rose sharply, with BPCL hitting a fresh 52-week high of Rs. 1,101.90 before closing at Rs. 1,091.90 apiece. HPCL ended with gains of 2.47 percent at Rs. 1,020.55
The series of ATF price hike is likely to reflect in the first quarter results of airlines, even as they are overcoming the lean season with discount offers to increase their topline.