Shares of aviation companies such as SpiceJet, Jet Airways and IndiGo rallied up to 14 per cent on New Year's day after the oil companies cut aviation turbine fuel (ATF) prices by 10 per cent on Thursday on account of low crude oil prices globally.
The prices have slumped about 24 per cent from the January 2015 level.
The stock of SpiceJet hit its fresh 5-year high of Rs 85.90, up 14.15 per cent on the Bombay Stock Exchange (BSE). It ended 9.44 per cent higher.
Shares of Jet Airways added 8.28 per cent after gaining 10.84 per cent to log its fresh 52-week high of Rs 778.60. The scrip hogged limelight also because it debuted from January series on F&O segment.Stock of InterGlobe Aviation, which operates low-cost airline IndiGo, also rose as much as Rs 1395.50, up 13.08 per cent. It settled the day 8.73 per cent up.
Declining global oil prices have made oil imports cheaper, resulting in price cut for the airlines. For low-cost airlines, Air Turbine Fuel (ATF) constitutes for about 50 per cent of airlines' expenditure. For full-service carriers, this figure comes in at 35 per cent.
The price reduction in ATF has eased the financial burden of cash-strapped carriers.
ATF price in Delhi and Mumbai now stands at Rs 39,892.32 and Rs 39,009.02 per kilolitre, respectively. In Kolkata, it stands at Rs 46,368.94 and in Chennai Rs 42,418.64 per kilolitre.