Aviation Stocks In Demand

Three aviation stocks rose by 2.95% to 9.93% on BSE on report foreign airlines may be allowed to pick up 49% stake in domestic airlines soon.

Kingfisher Airlines (up 9.93%), SpiceJet (up 9.09%) and Jet Airways (India) (up 2.95%), edged higher.

The BSE Sensex was up 156.36 points or 0.89% at 17,634.51.

Shares of Kingfisher Airlines had underperformed the market over the past one month until 2 April 2012, falling 36.82% compared with the Sensex's 0.90% fall. The scrip had also underperformed the market in past one quarter, sliding 28.27% as against 12.63% rise in the Sensex.

Shares of SpiceJet had outperformed the market over the past one month until 2 April 2012, rising 16.91% compared with the Sensex's 0.90% fall. The scrip had also outperformed the market in past one quarter, gaining 48.01% as against 12.63% rise in the Sensex.

Shares of Jet Airways (India) had outperformed the market over the past one month until 2 April 2012, gaining 12.03% compared with the Sensex's 0.90% fall. The scrip had also outperformed the market in past one quarter, gaining 90.40% as against 12.63% rise in the Sensex.

According to the media report, the Department of Industrial Policy and Promotion (DIPP) will float a Cabinet note for allowing foreign carriers to buy up to 49% stake in local airlines in 8-10 days.

Allowing foreign carriers to invest in domestic carriers will bring much-needed cash for the ailing domestic aviation sector that has been badly hit by high jet fuel price and a weak rupee. At present, while foreign airlines are barred from investing in Indian carriers, other foreign investors are allowed to pick upto 49% stake.

Meanwhile, public sector oil marketing companies have hiked jet fuel price by about 3%. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was hiked by Rs 1,850.96 per kilolitre (kl), or 2.8%, to Rs 67,800.30 per kl from midnight of 31 March 2012.

ATF typically makes up almost half of an airline's operating cost. PSU OMCs revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Some media reports suggested that SpiceJet has applied to the Director General of Foreign Trade (DGFT) for permitting the airline to directly import jet fuel, which would enable airlines to cut operating costs by 10-15% and saving on sales tax.