IndiGo, SpiceJet Share Price Jump Up to 7% as Falling Crude Oil Prices Boost Aviation Stocks

Shares of airline companies IndiGo and SpiceJet witnessed strong buying interest on June 12 after global crude oil prices declined sharply. The fall in oil prices came after US President Donald Trump said a peace agreement with Iran was close and cancelled plans for military strikes.

The development raised hopes that tensions in West Asia could ease, reducing concerns over oil supply disruptions and supporting investor sentiment in aviation stocks.

Airline Stocks Gain Up to 7%

InterGlobe Aviation, the parent company of IndiGo, opened higher and gained nearly 4% during intraday trading.

SpiceJet also rallied strongly, rising as much as 7% during the session.

Investors welcomed the drop in crude oil prices as fuel costs are one of the largest expenses for airlines.

Crude Oil Prices Hit 2-Month Lows

Oil prices declined after optimism grew around a possible agreement between the US and Iran.

• Brent crude fell 1.5% to around $89 per barrel.
• US WTI crude dropped 2% to nearly $86 per barrel.

Why Lower Oil Prices Benefit Airlines?

Aviation Turbine Fuel (ATF) is the biggest operating cost for airlines and typically accounts for around 40% of total expenses. During periods of high volatility, this share can rise to nearly 60%.

Lower crude oil prices generally lead to lower jet fuel costs, which can improve airline profitability and reduce pressure on margins.

Aviation Sector Faces Cost Pressures

India's aviation sector has been under pressure due to rising fuel costs and disruptions caused by the West Asia conflict.

According to reports, international jet fuel prices had surged to around ₹142 per litre in May, compared to pre-conflict levels of about ₹60.50 per litre.

Higher fuel prices raised concerns about airline profitability and the possibility of increased airfares.

New ATF Pricing Scheme Introduced

Earlier this week, aviation fuel prices were increased by nearly 10% as oil marketing companies introduced a fuel price stabilisation scheme.

Under the voluntary scheme:

• Airlines can lock in ATF prices for up to 3 years.
• Participating airlines will pay a fixed rate of ₹115 per litre.
• Airlines choosing not to join the scheme will continue to pay market-linked prices.

The initiative is aimed at reducing the impact of global fuel price fluctuations on airline operations.

Read More: NLC India Company Signs MoU With CSIR-CECRI for Critical Minerals Research!

Conclusion

A sharp decline in crude oil prices boosted aviation stocks, with IndiGo and SpiceJet emerging among the top gainers. 

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