Aviation stocks rally after direct jet fuel import allowed

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Tue, 07 Feb 2012 16:03:26 GMT

Aviation stocks rally after direct jet fuel import allowed

Mumbai: Scrips of three listed domestic carriers — Jet Airways, Kingfisher Airlines and SpiceJet — rallied after the government Tuesday allowed airlines to import jet fuel directly.

Aviation stocks rally after direct jet fuel import allowed

The decision on direct jet fuel imports was taken by an empowered group of ministers (EGoM) headed by Finance Minister Pranab Mukherjee.

Analysts said the move, announced by Civil Aviation Minister Ajit Singh, would help airlines to cut 10-15 percent of their operating cost.

The move will enable airlines to directly import jet fuel as an end user, thereby saving sales tax, which ranges between 20-35 percent and is levied by state governments.

The Indian aviation sector been reeling under rising aviation turbine fuel (ATF) prices caused by high sales tax and other levies. Domestic airlines are estimated to have lost around Rs.3,000 crore in the first six months of this fiscal.

Mumbai: Scrips of three listed domestic carriers — Jet Airways, Kingfisher Airlines and SpiceJet — rallied after the government Tuesday allowed airlines to import jet fuel directly.
This is very positive news for the industry. The airlines can be able to save up to 10-15 percent of their operating cost as jet fuel accounts for nearly 50 percent of the cost,’ Sharan Lillaney, aviation analyst, Angel Broking told IANS.

‘The decision will help the airlines to break-even, pay back the oil marketing companies.

The scrip of Vijay Mallya-led Kingfisher Airlines hit an intra-day high of Rs.30.90, up 20 percent from Monday’s close of Rs.25.75 at the Bombay Stock Exchange. The stock was hovering around Rs.28.50 in afternoon trade.

The Jet Airways stock too gained 18.06 percent and touched a high of Rs.351.90 from the previous close of Rs.298.05. The stock was Rs.336.90 around 2.30 p.m.

Budget carrier SpiceJet also gained 19.51 percent at BSE and touched an intra-day high of Rs.29.40 from the previous close of Rs.24.60

Analysts, however, said more clarity was required as to how airlines would manage the logistics of storing and importing fuel.

‘We have to see how the airlines will import the fuel, do they have the cash to do so, where will they store the fuel, will they use the oil marketing companies’ infrastructure or not. So there needs to be clarity on these things first, besides this, the news is very positive,’ said Lillaney.

Airlines have not yet come out with any logistics plan for storing and importing the fuel. This was one of the arguments by the three oil marketing companies Hindustan Petroleum, Indian Oil and Bharat Petroleum, who were opposing the move.

ATF is currently sold at Rs.71,155.22 per kilolitre (kl) in Kolkata, at Rs.67,702.21 per kl in Chennai, at Rs.63,864.31 per kl in Mumbai and Rs.62,907.82 per kl in New Delhi.

The average fuel price in cities like Kuala Lumpur is around Rs.41,000 per kilo litre, followed by Singapore at Rs.42,000 and Dubai at Rs.43,000.

Source: IANS

 

Oil firms resume fuel supplies to Air India

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Fri, 03 Feb 2012 10:10:51 GMT

Oil firms resume fuel supplies to Air India

New Delhi: State-owned oil companies have resumed jet fuel supplies to Air India after the national carrier promised to pay Rs 268 crore in dues on Friday.

Oil firms resume fuel supplies to Air India

Oil company officials said the supplies are being resumed after Air India promised to clear dues by on Friday evening. All the three oil companies – Indian Oil, Bharat Petroleum and Hindustan Petroleum – had jointly stopped Air Turbine fuel (ATF) supplies to Air India at Delhi, Mumbai, Kolkata, Chennai, Trivandrum and Kochi from 1600 hours on Thursday.

The carrier had failed to honour payments even after 90-day credit period.

Earlier in the day, Civil Aviation Secretary Nasim Zaidi said that he had asked the petroleum secretary to not stop the jet fuel supply to the carrier. “I have spoken to the Petroleum Secretary not to disrupt (aviation turbine fuel) supplies and he has assured,” Civil Aviation Secretary Nasim Zaidi said.

Senior Air India officials have claimed that the airline owed Rs 260 crore to the oil companies for the credit period and “we are well within the credit limit.” Overall, Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament.

The oil companies decided to stop ATF supplies saying Air India had not honoured its commitment to make payments for jet fuel it bought from the oil companies even after expiry of 90 day credit period.

Source: PTI

Image Source: Reuters

Aviation Fuel prices down in India

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Wed, 01 Feb 2012 08:27:09 GMT

Jet fuel price cut by Rs 1,974 a kilolitre

State-owned oil marketing companies (OMCs) Tuesday cut aviation fuel prices by Rs 1,974.29 or 3.04 percent a kilolitre (kl), effective from midnight Wednesday, as an appreciating rupee against the dollar made imports cheaper.
With this, the price of air turbine fuel (ATF) at Delhi’s Indira Gandhi International Airport will come down from Rs.64,882.11 to Rs.62,907.82 a kl.

Just a fortnight ago, Indian Oil, Bharat Petroleum and Hindustan Petroleum had raised the price by 2.86 percent or Rs.1,805.44 per kl.

The rupee appreciated to Rs.49.50 per dollar from over Rs.52 per dollar a fortnight ago.

The latest cut is expected to reduce the burden on the aviation industry, with many airlines incurring losses due to the high cost of jet fuel.

“Any reduction in ATF prices is a welcome step. But there is still a long way to go in rationalizing our domestic ATF prices which are nearly 50-60 percent higher than that in our competing markets like Middle East and Southeast Asia,” Amber Dubey, director, aviation, at consultancy firm KPMG told IANS.

The ATF price accounts for nearly 50 percent of the operating cost of an airline. Jet fuel prices also vary from state to state which levy sales tax on the ATF in the region of 3 to 35 percent.

The OMCs revise ATF prices on every 1st and 16th of the month based on the average international crude oil price during the fortnight.

Source: IANS