Shares of airline companies were in demand on July 18 after the oil marketing companies cut down air turbine fuel (ATF) prices by over 2 percent, providing a relief to the struggling carriers.
At 2:00 pm, shares of Interglobe Aviation, which runs IndiGo, were trading about 1 percent higher at Rs 1800.50 apiece on the BSE. SpiceJet, the airline that has struggled recently with a number of technical snags, gained 3.7 percent at Rs 39.55 apiece. Jet Airways, which is yet to resume its operations despite getting a permission, traded flat at Rs 104.30. The benchmark Sensex was at 54,338.50, up 577.72 points or 1.07 percent.
A price notification of state-run fuel retailers said ATF prices have been reduced by Rs 3,084.94 per kilolitre, or 2.2 per cent, to Rs 138,147.93 per kilolitre. This marks the second reduction in the current year.
ATF prices are revised on the 1st and 16th of every month based on rates of benchmark international oil rates in the previous fortnight. Fuel prices shot to record highs thanks to the rally in crude oil prices in the international markets. However, the prices have come down recently, allowing oil marketing firms to provide relief to the airline companies.
In June, ATF prices were hiked 16 percent in one go to push the prices to Rs 141,232.87 per kilolitre or Rs 141.23 per litre. Apparently, just before then prices were cut down by a little over 1 percent, marking the first such instance during the year.
Fuel costs are a major expense for airline companies. For some of them it constitutes more than 20 percent of their total costs.
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