Is hiking airfares a feasible option?

Record high prices of Aviation Turbine Fuel (ATF) at Rs 75,000 per kilo litre (KL) are proving nightmares for India’s airline companies.

As a reaction to the latest hike in prices, the fourth consecutive monthly hike since June this year, India’s low cost airline company SpiceJet said that it will hike airfares by 30%.

If hike comes through, it may revive sentiments on the aviation counters which, for long, are hovering very close to their 52-week low. Out of the three listed firms, two are in operations currently – Jet Airways and SpiceJet.

Shares of Naresh Goyal – promoted Jet Airways closed on Tuesday at Rs 309.40 while those of SpiceJet remained weak at Rs 18.95.

But for them to remain flying for long is becoming difficult on the back of current all time high prices of ATF. A hike in airfares could ease the pressure a bit. But question which arises is how far will it be feasible for airline companies to play that card?

Full report here Business Standard 


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