Airlines facing turbulence from soaring aviation turbine fuel (ATF) prices can look forward to some respite. From Monday, airlines can hedge against future price movements of their most expensive input, by trading in ATF futures on the Multi Commodity Exchange (MCX.) Moreover, they can settle contracts in rupees instead of dollars, thus limiting currency risks.
MCX is the second commodity exchange in the world, after the Tokyo Commodity Exchange, to launch futures trading in ATF. ATF contracts for July, August, September, October, November and December will begin trading on the exchange from Monday.
“This would help airlines and oil refining companies in managing their risk and fix prices of tickets before months,” Sumesh Parasrampuria, chief business officer, MCX, told FE.
Now, Indian companies vulnerable to volatile crude prices were using international hedging platforms in the absence of a domestic market. This involved currency risks, since the contracts were made mostly in dollar.
“Henceforth, airlines and oil companies would able to settle the contract through rupee payment instead of dollar,” Parasrampuria said.
BPCL, HPCL, IOC, Nacil, Go Air and Jet Airways have already evinced interest in hedging on the MCX platform.