Shares of aviation firms SpiceJet and InterGlobe Aviation came under heavy selling on Thursday after aviation turbine fuel (ATF) or jet fuel prices were raised to a record high.
The stock of SpiceJet tanked 7.05 per cent to settle at Rs 40.90 apiece on the BSE. During the day, it tumbled 8.29 per cent to its one-year low of Rs 40.35.
InterGlobe Aviation, parent firm of IndiGo, fell by 5.22 per cent to Rs 1,644.65 apiece. During the day, the stock declined 5.83 per cent to Rs 1,634.
On Thursday, jet fuel prices were hiked by the steepest-ever 16 per cent to catapult rates to an all-time high in step with hardening international oil rates.
The sharp increase in aviation turbine fuel prices and depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares, said Ajay Singh, Chairman and Managing Director, SpiceJet, on Thursday.
A minimum 10-15 per cent increase in air fares is required to ensure that the cost of operations are better sustained, Singh said in a statement.
The increase in jet fuel price will raise the operating cost for airlines. ATF makes up to 40 per cent of an airline's operating cost.
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