IndiGo, SpiceJet Drop Up to 5% Amid Crude Oil Surge and Shutdown Concerns
Shares of InterGlobe Aviation and SpiceJet came under sharp selling pressure on April 28, falling up to 5% as soaring crude oil prices intensified concerns over rising operating costs. The broader aviation sector also traded weak, reflecting mounting stress across the industry.
Market Reaction: Airline Stocks Under Pressure
InterGlobe Aviation, which operates IndiGo, declined nearly 3% during intraday trade, while SpiceJet hit its 5% lower circuit. Other aviation-related stocks also witnessed selling pressure, indicating sector-wide weakness.
The decline came even as the broader BSE Sensex remained relatively stable, highlighting the aviation sector’s vulnerability to rising fuel costs.
Crude Oil Rally Sparks Cost Concerns
The sharp fall in aviation stocks is closely linked to the recent surge in global crude oil prices. Brent crude climbed above $110 per barrel, marking a sustained uptrend driven by geopolitical tensions in West Asia.
A key concern is disruption around the Strait of Hormuz, a crucial global energy route responsible for a significant share of oil shipments. Tight supply conditions have pushed fuel prices higher, directly impacting airline profitability.
ATF Prices: The Biggest Pain Point
Aviation Turbine Fuel (ATF), which accounts for over 50% of airline operating costs, has become increasingly volatile. Rising crude prices have led to sharp increases in ATF rates by oil marketing companies, putting pressure on airline margins.
For international operations, the situation is even more challenging, with ATF prices reportedly rising by ₹73–75 per litre. This has made several routes economically unviable and forced airlines to reassess network strategies.
Industry Body Raises Red Flag
The Federation of Indian Airlines (FIA) has issued a strong warning to the government, stating that the aviation industry is under “extreme stress” and could face operational disruptions if immediate support is not provided.
In its communication to the Ministry of Civil Aviation, the FIA highlighted:
- Unpredictable ATF pricing affecting planning and operations
- Imbalance between domestic and international route economics
- Increasing financial strain on airline companies
The body warned that current conditions are unsustainable and could push airlines toward scaling down or halting operations.
Key Demands from the Industry
To ease the crisis, the FIA