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Aviation Stocks Soar as Lower Fuel Prices Boost Industry

Strategic Insights

— 2 min read

As the aviation sector in India continues to recover from a downturn, lower fuel prices have become a major catalyst for the growth of airline stocks. In the past year, SpiceJet's stock has surged six-and-a-half times, from Rs 11.5 to Rs 72.5, outperforming international airlines such as China Southern Airlines and Qantas Airways. InterGlobe Aviation, the owner of IndiGo, the largest airline in the country, has had a stellar debut on the bourses, with its stock closing 42% higher than its IPO price. Jet Airways (India) has also seen a significant recovery, with its stock more than doubling in value since touching a 52-week low.

Key Takeaways:

  • SpiceJet's stock has surged six-and-a-half times in the past year, from Rs 11.5 to Rs 72.5.
  • InterGlobe Aviation, the owner of IndiGo, has seen its stock close 42% higher than its IPO price of Rs 765 per share.
  • Jet Airways (India) has more than doubled in value since touching a 52-week low of Rs 241.
  • The domestic air travel market in India has seen a growth rate of almost 20% in the first 10 months of the year, with 6.6 crore domestic flyers.
  • The aircraft occupancies of 'old' domestic airlines ranged from 93.1% for SpiceJet to 77% for Air India in October.
  • Experts are advising caution due to the steep increase in stock prices, warning that airline stocks are overvalued.
  • Aviation scrips are expected to continue their upward trend if policy changes are implemented and a long-term view of the sector is taken.

Statistics:

  • SpiceJet's stock surge: 6.5 times in the past year, from Rs 11.5 to Rs 72.5.
  • InterGlobe Aviation's IPO price: Rs 765 per share.
  • Jet Airways (India) stock value: more than doubled since touching a 52-week low of Rs 241.
  • Domestic air travel growth rate: almost 20% in the first 10 months of the year.
  • Number of domestic flyers: 6.6 crore in the first 10 months of the year, up 20% from 5.5 crore in the same period last year.
  • Aircraft occupancies: SpiceJet 93.1%, Air India 77% in October.
  • Fuel prices: at a four-year low, with ATF prices accounting for almost half of an airline's operating expenses in India.

Sources:

  • Bloomberg
  • Business Standard: "SpiceJet shares soar 150% in a year; Ajay Singh's airline bets on low oil prices" (November 24, 2022)
  • Business Standard: "InterGlobe Aviation lists at a premium, stock surges 42% on debut" (November 10, 2022)
  • Business Standard: "Jet Airways shares more than double in value since touching 52-week low" (November 25, 2022)
  • The Hindu BusinessLine: "Aviation industry logs highest growth in domestic air travel in India" (November 2022)

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