IndiGo, SpiceJet, other aviation stocks jump despite jet fuel price hike; here's why

Shares of aviation-related stocks such as InterGlobe Aviation Ltd (IndiGo's parent), SpiceJet Ltd, TAAL Tech Ltd and Global Vectra Helicorp Ltd were trading higher in Wednesday's session. Other sector-linked players, including Dreamfolks Services Ltd and GMR Airports Ltd, also saw gains.

The rise in aviation stocks comes even as aviation turbine fuel (ATF), or jet fuel, prices have surged sharply, tracking the spike in global crude oil prices amid the escalating conflict in West Asia.

According to official data, ATF prices in New Delhi were increased to Rs 2,07,341.22 per kilolitre (kl), up from Rs 96,638.14 per kl, marking a jump of over 114 per cent. This is the first time jet fuel prices have crossed the Rs 2 lakh per kl mark.

"In the short-term, this (price hike) is not good news because around 40-45 per cent of the operational cost is ATF. And, it has no choice but to raise ticket prices. I think this is going to impact its volumes in the near term. But there is also one important thing that IndiGo controls a major chunk of the market share in the aviation sector," market expert Avinash Gorakshakar told Business Today.

"Weaker players like SpiceJet could be impacted more badly. IndiGo does have the capacity to take this cost in the short term. But eventually, the airlines will be passed on to the customers. So, there could be a little bit of negativity, probably in the April-June quarter (Q1 FY27) because this impact may not be felt in the fourth quarter (Q4 FY26) numbers. But, going forward in the next 6-12 months, if crude prices cool off, then I think ATF prices could come down. So, the market is probably giving that indication in the stock prices, which are up this morning despite the ATF price hike," he added.

Meanwhile, IndiGo has named industry veteran Willie Walsh as CEO. Separately, senior bureaucrat Vir Vikram Yadav has been appointed as the chief of the Directorate General of Civil Aviation (DGCA).