Airline stocks that were grounded by a pile of negative developments took to the skies today after reports of the Group of Ministers on Aviation (GoM) approving the proposal to allow direct import of aviation turbine fuel (ATF) by airlines.

Though the Civil Aviation Minister, Mr Ajit Singh, clarified that the Cabinet approval would have to be sought for the proposal, the market responded with gusto to the proposal crossing the first hurdle and all the three aviation stocks witnessed robust trading and value appreciation.

Jet Airways, in terms of value, was the biggest gainer with the share moving up by Rs 50.35 or 16.89 per cent to Rs 348.40 with about 41.57 lakh shares being traded on the BSE.

Kingfisher Airlines, which has been in the thick of negative news flow surrounding it, jumped by Rs 4.45 or 17.28 per cent to Rs 30.20. The counter recorded a huge volume of trading of 79.75 lakh shares.

Surprisingly SpiceJet, which came out with depressing Q3 numbers today, was the most heavily traded stock among the aviation pack with about 2.54 crore shares changing hands on the BSE. The stock was up by Rs 4.55 or 18.50 per cent to Rs 29.15 by 1.45 p.m.

ATF cost

The ATF cost is the single biggest head of expenses for the airlines, at times even accounting for about 50 per cent of the total turnover and larger than the rest of the operating expenses.

For instance, in Q3 of this fiscal, for SpiceJet out of Rs 1,153.13-crore turnover, the aviation fuel expenses alone accounted for Rs 592.30 crore. But the staff cost was just about 20 per cent of it — Rs 112.08 crore!

It remained to be seen whether the import of ATF would bring the same relief that it was expected to provide when the value of Indian rupee had plummeted to around Rs 54/$ level some weeks back.

Now the rupee value has appreciated to Rs 49/dollar and the relief would have taken a proportionate hit, though the high tax rates have been a bugbear for the aviation industry.

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