MUMBAI: Share prices of listed airline companies took a knock on Thursday, reacting to the government’s imposition of import duty on aviation turbine fuel (ATF or jet fuel).
Shares of Jet Airways closed at Rs 182.65, down by 4.8 per cent; that of SpiceJet at Rs 68, down 1.9 per cent; and of Inter Globe Aviation that runs IndiGo at Rs 839.15, down 1.6 per cent.
Airlines stocks have been already been under pressure over weak air traffic numbers in August and depreciating rupee value. Five per cent import duty on a product that so far had none has come as a surprise to the markets. Though import of jet fuel is negligible with surplus refining capacity in the country, any import duty on the product can have a direct impact on the fuel price. India follows a trade parity price for fuel, which is a combination of import and export prices.
The share prices, however, recovered later in the day as oil companies did not pass on the duty component and hike prices. Normally, any duty hike comes into effect by midnight of the same day, but jet fuel prices were not changed on Wednesday night. ATF prices for Delhi stands at Rs 69,461 per kl, the price last fixed on September 1.
If the import duty had been taken into account, the price should have been revised upwards by around Rs 2,000 per kl. It is also not clear if the price would be hiked during the next revision due on October 1.