Airline stocks rise amid hopes of cut in ATF tax

New Delhi: Domestic airline stocks surged in Thursday’s trade at the Bombay Stock Exchange amid speculation that relief by way of reduced taxation on jet fuel, their biggest expense, could be granted soon.
Jet Airways (India) Ltd, the nation’s largest airline by market value, shot up 18.05% to Rs315.60 a share. Kingfisher Airlines Ltd rose 12.41% to end at Rs53 while SpiceJet Ltd, a discount carrier backed by US-based billionaire Wilbur Ross, gained 7.18% to end at Rs33.60, its highest since 11 July 2008, when it ended at Rs32.40.
A senior full-service airline executive said that the stocks shot up on speculation that the government may include aviation turbine fuel (ATF) under the purview of goods and services tax or GST, which is to be imposed starting 1 April. That will bring the tax on it to a uniform 12%, which will subsequently go down to 8%, said the executive, who did not wish to be named.
Another executive with a Mumbai-based carrier, who also did not speak on record, said Jet and Kingfisher have embarked upon fund-raising initiatives including the sale of stock to qualified investors and rights issues and therefore the “stocks are getting active on the counters.”
17/09/09 P.R. Sanjai and Tarun Shukla/Livemint

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Categories: Indian Aviation- In General Sep 2009