IndiGo and SpiceJet Stocks Decline Amid Rising Aviation Fuel Costs

Aviation Turbine Fuel Costs Weigh on Indian Airlines

Shares of InterGlobe Aviation and SpiceJet declined on Tuesday, tracking a sharp rise in crude oil prices, which has intensified pressure on aviation turbine fuel (ATF) costs and airline profitability. IndiGo's stock fell over 2 percent to Rs 4,461.2 in afternoon trade, making it one of the top losers on the Nifty 50, while SpiceJet shares dropped 3.9 percent to Rs 14.16.

The weakness in airline stocks comes as crude oil prices extended gains amid escalating tensions in West Asia, with Brent crude rising above $110 per barrel and logging its seventh consecutive day of gains. The disruption of supplies through the Strait of Hormuz, a critical global energy artery that typically carries about a fifth of global oil and gas flows, has tightened supply and kept energy prices elevated.

Higher crude prices directly translate into elevated ATF costs, the single-largest expense item for airlines. The Federation of Indian Airlines, which represents major carriers including Air India, IndiGo, and SpiceJet, has warned that the industry is under "extreme stress" due to a sharp spike in fuel prices.

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In a letter to the Civil Aviation Secretary, the industry body said ATF prices for international operations have risen by about Rs 75 per litre, pushing fuel costs to nearly 60 percent of total operating expenses. It added that pricing remains "ad hoc" and misaligned with crude oil trends due to persistently high crack spreads, further worsening cost pressures for airlines.

The FIA cautioned that the sector is in a "very difficult, precarious and challenging situation", with airline networks becoming "unviable and unsustainable". It warned that if conditions persist, carriers may be forced to cut routes, ground aircraft, or cancel flights, raising the risk of widespread disruption to operations.

Seeking urgent relief, 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 the current crisis.

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The pressure on airline stocks reflects investor concerns that elevated fuel costs, combined with limited pricing power, could weigh on margins and delay any near-term recovery in profitability for the sector.