Jet fuel or ATF (aviation turbine fuel) prices in the national capital were cut to Rs 1.01 lakh per kilolitre (kl) from Rs 1.06 lakh on January 1. State-owned Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum revise ATF prices on the 1st of every month, based on the average international price in the previous month.
The second half of last year saw a steady escalation in the prices of aviation turbine fuel (ATF), with a cut coming finally in November 2023 as crude price started cooling off.
ATF constitutes a significant portion of an airline's operational expenditures, often requiring fare adjustments to accommodate the impact of increased costs. Lower ATF prices indicate some respite for airfares as well.
The revision of ATF prices is a common practice and is influenced by factors such as the average rate of the international benchmark and foreign exchange rates. These adjustments, often made on a monthly basis, impact the overall operational expenses of airlines, providing relief or adding to the financial challenges they face, depending on the direction of the change.
On back of this, shares of Interglobe Aviation and Spicejet gained 1.77 percent and 1.92 percent, respectively. At 9:30 am, Indigo shares were quoting at Rs 3,019.60 on the NSE and Spicejet was quoting at Rs 61.20.
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IndiGo - the country’s largest airline and one of the two listed airlines in the country, saw its fuel expenses at 37.15 percent of total expenditure. In absolute terms, the airline spent Rs 5,228 crore on fuel in the first quarter of FY24.
For the quarter ended September, the company posted a profit of Rs 188.9 crore compared to a net loss of Rs 1,583.33 crore in the same period a year ago.
Revenue from operations for IndiGo rose 19.5 percent to Rs 14,943 crore, from the year-ago period when the airline had reported a topline of Rs 12,497 crore.
Meanwhile, SpiceJet's net loss narrowed to Rs 449 crore in September quarter, compared with Rs 830 crore in the year-ago period. Consolidated revenue from operations fell 27 percent year-on-year to Rs 1,429 crore. The company has submitted bids to acquire Go First, which is undergoing insolvency proceedings.
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