Airline stocks take a knock after government hikes customs duty on ATF imports; Jet Airways tanks 6%

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Updated: September 27, 2018 11:40 AM

Airline stocks were already on a downward spiral this week after monthly passenger traffic figures indicated a decline in domestic passenger growth for the month of August amid a depreciating rupee and rising aviation fuel prices.

ATF imports, customs duty, airline stocks, jet airways, spicejet, indigoAviation stocks took a hit on Thursday, with Jet Airways shares plunging nearly 6% during morning trade session.

Aviation stocks took a hit on Thursday, with Jet Airways shares plunging over 6% during mid-morning trade session. Shares of SpiceJet and InterGlobe Aviation, too, fell to their respective 52-week lows following the government’s move to hike the customs duty on aviation turbine fuel (ATF) from 0% to 5%.

Jet Airways shares plunged 6.4% to a fresh 52-week low of Rs 179.60 per share during morning trade deals. Shares of InterGlobe Aviation, the operator of low-cost airline IndiGo, slipped 4% to a new record low of Rs 818.55 on the BSE. SpiceJet shares fell 3.89% to an intra-day low of Rs 66.70.

Airline stocks were already on a downward spiral this week after monthly passenger traffic figures indicated a decline in domestic passenger growth for the month of August amid a depreciating rupee and rising aviation fuel prices. Data released by the Directorate General of Civil Aviation on Monday showed that domestic passenger growth in August was the lowest since May at 17.2%.

Also read: Share market live update: Sensex, Nifty give up early gains as F&O expiry weighs

In a major move to narrow the country’s current account deficit (CAD) and stem the fall of the rupee, the government on Wednesday hiked import duties on 19 ‘non-essential’ items ranging from gems and jewellery to ATF. However, no import curbs have been imposed on gold and steel. The new import duties will go into effect from September 27.

An official statement showed that duties have been raised, or imposed, on 19 products: air conditioners, household refrigerators, washing machines, compressors for air conditioners and refrigerators, speakers, footwear, radial car tyres, various gems and jewellery products, plastic goods, luggage carriers like suitcases etc, and ATF.

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