Aviation stocks slip 5% as rising fuel prices hit margins
What's the story
Shares of InterGlobe Aviation (IndiGo) and SpiceJet witnessed a steep fall on Tuesday. The decline comes in the wake of a sharp rise in crude oil prices, which has put pressure on aviation turbine fuel (ATF) costs and airline profitability. IndiGo's stock fell over 2% to ₹4,465 while SpiceJet shares dropped by nearly 5% to ₹14 at the time of market closure.
Market impact
Brent crude has crossed $110 per barrel
The fall in airline stocks comes as crude oil prices continue to rise amid growing tensions in West Asia. Brent crude has crossed $110 per barrel, marking its seventh consecutive day of gains. The disruption of supplies through the Strait of Hormuz, a major global energy route that usually carries about one-fifth of global oil and gas flows, has tightened supply and kept energy prices high.
Cost implications
FIA warns of extreme stress in airline sector
The rise in crude prices directly impacts ATF costs, which is the single-largest expense item for airlines. The Federation of Indian Airlines (FIA), an industry body representing major carriers such as Air India, IndiGo, and SpiceJet, has warned that the sector is under "extreme stress" due to a sharp spike in fuel prices. The FIA's warning comes amid fears that high fuel costs could hurt margins and delay profitability recovery for the sector.
Urgent appeal
FIA calls for government intervention to support airlines
In a letter to the Civil Aviation Secretary, the FIA said ATF prices for international operations have risen by about ₹75 per liter. This has pushed fuel costs to nearly 60% of total operating expenses. The industry body has called for immediate and meaningful financial support from the government, including a temporary suspension of excise duty on ATF, to help airlines sustain operations during this crisis.