Stocks of Aviation companies surged 5-8% on Tuesday as prices of Brent crude oil touched multi-year lows. Shares of InterGlobe Aviation rallied 8.57% during the session, while shares SpiceJet and Jet Airways settled 7.2% and 5.16% higher respectively.
Price of Brent Crude Oil is hovering around $38.5 per barrel – about 43% decline from the 2015 peak of $67.77 per barrel. Falling prices of aviation turbine fuel – which accounts to 40-50% of the operating expense of airline companies – has improved the operating margins of the aviation companies during CY2015, experts said.
InterGlobe Aviation shares closed at a price of R1,184.5 in the BSE. Scrips of Delhi-based low cost carrier have rallied more than 50% since the stock got listed on the bourses in November. The company had raised more than R3,000 crore from the primary market via IPO.
The Union government had released Draft National Civil Aviation Policy 2015 on October 30 which aimed to make flying affordable for the masses. The draft underlines 16 critical areas of civil aviation including safety,regional connectivity, bilateral traffic rights, and MRO operations.
Shares of Airline companies rallied in the last one month after numerous High Networth Individuals(HNIs) including Rakesh Jhunjhunwala increased their stock holdings in Airlines. Shares of Jet Airways soared nearly 17% since November.
In Mid last month, Competition Commission of India (CCI) passed an order penalising the three airlines for cartelisation in determining the fuel surcharge on air cargo.CCI, which is the government authority to enforce the Competition Act, imposed penalties of R151.69 crore and R63.74 crore on Jet Airways and InterGlobe Aviation while SpiceJet was ordered to pay R42.48 crore.
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