Indian aviation stocks came under pressure on Tuesday as a sharp rise in crude oil prices pushed up aviation turbine fuel (ATF) costs, raising fresh concerns over airline profitability and operations.
Shares of InterGlobe Aviation, which operates IndiGo, fell nearly 3 per cent to Rs 4,427.90, while SpiceJet dropped around 5 per cent to Rs 14 apiece during afternoon trade, reflecting investor unease over rising cost pressures.
Oil Rally Sends Shockwaves Through Aviation Sector
The sell-off in airline stocks comes amid a sustained rally in crude oil prices. Brent crude has climbed above $110 per barrel, extending gains for a seventh straight session as tensions in West Asia disrupt global energy supply chains.
A key concern remains the Strait of Hormuz, a critical shipping route that typically handles about one-fifth of global oil and gas flows. Disruptions in this corridor have tightened supply and kept energy prices elevated.
ATF Costs Spike, Margins Take a Hit
Higher crude prices directly impact ATF, the single-largest cost component for airlines. According to a report by CNBC TV18, the Federation of Indian Airlines (FIA) has warned that the sector is under “extreme stress” due to the sharp surge in fuel prices.
In a communication to the Civil Aviation Secretary, the industry body said ATF prices for international operations have increased by around Rs 75 per litre. Fuel expenses now account for nearly 60 per cent of total operating costs.
The FIA also flagged concerns over pricing remaining “ad hoc” and misaligned with crude trends due to persistently high crack spreads, further aggravating cost pressures.
