Shares of aviation companies surged in intra-day trade on Wednesday, with Jet Airways climbing as much as 13.8% to an intra-day high of Rs 199.70 per share on the BSE. Spicejet also jumped in session by 8% to record a day’s high of Rs. 70.5 while Interglobe Aviation surged by as much 5.7% to a high of Rs 765.30 on the BSE. .
The surge in share price of airline stocks comes on the back of media reports that finance ministry is preparing a proposal to be submitted to the Election Commission to cut excise duty on aviation turbine fuel or ATF to 8% from 14% currently. On September 26, to curb India’s rising current account deficit and stem rupee’s free-fall, the government raised import duty on some 19 non-essential items including ATF that was hiked to 5% from the earlier 0% , which sent the airline stocks crashing to record lows then.
The excise duty cut on ATF has been long pending and any positive move in this direction will lower down the cost for airline companies significantly.
Off late, shares of airline companies tumbled heavily due to rising crude oil prices and depreciating rupee. Up to their last closing price, Jet Airways has declined 79% this year while Spicejet and Interglobe have also slipped by as much as 55.3% and 40% respectively.