Aviation stocks soars as government lifts domestic airfare caps; InterGlobe, Spicejet gains

New Delhi: Following the Civil Aviation Ministry’s announcement that domestic airfare limitations will be lifted, aviation stocks were in high demand on Thursday.

After around 27 months, the Union Aviation Ministry said on Wednesday that restrictions on domestic airfare will be lifted as of 31 August.

Shares of InterGlobe Aviation opened at Rs 2,070.05, then gained further to touch 2,080.80, registering a jump of 2.09 per cent over its last close.

SpiceJet Ltd opened at Rs 46.05, then jumped as much as 6.80 per cent to Rs 47.90 a share.

“The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of Air Turbine Fuel (ATF). Stabilisation has set in and we are certain that the sector is poised for growth in domestic traffic in the near future,” Aviation Minister Jyotiraditya Scindia said on Twitter.

ATF prices have been coming down during the last few weeks after jumping to record levels, primarily due to the Russia-Ukraine war that began on February 24.

On August 1, the price of ATF in Delhi was Rs 1.21 lakh per kilo-litre, which was around 14 per cent lower than last month.

The ministry had imposed lower and upper limits on domestic airfares based on flight durations when services were resumed on May 25, 2020, after a two-month lockdown due to the COVID-19 pandemic.

On Wednesday, the Civil Aviation Ministry stated in an order: “After review of the current status of scheduled domestic operations viz-a-viz passenger demand for air travel…it has been decided to remove the fare bands notified from time to time regarding the airfares with effect from 31 August, 2022”.

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