Airline Stocks Fall as ATF Prices Rise 5.46%

Shares of domestic airlines IndiGo and SpiceJet traded lower on Tuesday morning after Aviation Turbine Fuel prices were increased for the second consecutive month, raising concerns over higher operating costs for carriers. InterGlobe Aviation, the parent company of IndiGo, was trading 2.80%, from the previous close. SpiceJet shares fell 0.87%. ATF prices for domestic airlines were raised by 5.46% on Tuesday, with the price increasing by ₹6.28 per litre. The back-to-back increases come after three consecutive monthly reductions beginning April 2025. During that period, ATF prices were cut by a cumulative ₹12,239.17 per kilolitre. The subsequent increases of ₹8,949.38 per kilolitre have now erased nearly three-fourths of those gains. Fuel is one of the largest expenses for airlines, accounting for nearly 40% of their operating costs. As a result, sustained increases in ATF prices can put pressure on airline margins, particularly if carriers are unable to fully pass higher costs on to passengers through fares. ATF prices also vary across cities because of differences in local taxes, including VAT. In August, ATF prices stood at ₹86,077.14 per kilolitre in Mumbai, ₹95,512.26 per kilolitre in Chennai and ₹95,164.90 per kilolitre in Kolkata. State-owned oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise ATF and cooking gas prices on the first day of every month. The revisions are based on average international benchmark fuel prices and prevailing foreign exchange rates. Meanwhile, domestic petrol and diesel prices remained unchanged.