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Spice Jet Shares Falls After MD Demands Of 10-15% Rise In Fares

Jet fuel prices, which make up for almost 40 percent of the running cost of an airline, had risen to new highs this year.

Spice Jet Managing Director on Thursday expressed his views on airfare prices are not sufficient and insisted on a rise in the ticket prices by at least 10 to 15%.

The shares of the airline declined by almost 4 percent on Thursday.

On the Bombay Stock Exchange SpiceJet stock fell 3.64 percent to last trade at ₹ 42.40, when the broader market and global risk assets rallied to resurge from deep sell-offs in previous sessions.

“The sharp increase in aviation turbine fuel (ATF) prices and the depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares,” Ajay Singh, Chairman and Managing Director at SpiceJet.

Jet fuel prices, which make up for almost 40 percent of the running cost of an airline, had risen to new highs this year after nine back-to-back raise.

A minimum of 10-15 percent increase in air fares is required to ensure that cost of operations is better sustained. SpiceJet has in the last few months tried to absorb as much burden of this fuel price rise, which constitutes more than 50 percent of our operational cost, as we could, said Mr. Singh in a statement.

“ATF prices have increased by more than 120 percent since June 2021. This massive increase is not sustainable and governments, central and state, need to take urgent action to reduce taxes on ATF that are amongst the highest in the world,” he added

“The weakening of the Indian rupee against the US dollar further significantly impacts airlines as our substantial cost is either dollar-denominated or pegged to the dollar,”  SpiceJet’s CMD further said.

In April this year, ATF prices saw a surge of 2 percent to Rs 1,12,924.83 per kilolitre. Later, on May 1, jet fuel prices had gone up by 3.2 percent, followed by the May 16 hike.

However, earlier this month, ATF prices were reduced by state-owned oil marketing companies by Rs 1,564 per kilolitre, to bring jet fuel costs down to Rs 1,21,475 per kilolitre from Rs 1,23,039 per kilolitre.

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