Airline Stocks Defy Changes In Fuel Prices
Airline stocks break free from fuel cost.
Jet fuel costs account for 30 to 40 percent of the total expenses of Indian passenger airlines and any change in aviation turbine fuel prices triggers an immediate reaction in the stock prices.
In today’s chart of the day, we explore the correlation between jet fuel prices and the average performance of three aviation stocks – IndiGo, Jet Airways, and SpiceJet.
In January and February, jet fuel prices were cut, yet airline stocks posted double digit losses. ATF prices were hiked in March, but aviation stocks gained 5 percent. The trend continued till June, with both fuel prices and stock returns increasing.
Even in July, when aviation fuel prices hit a 12-month high, airline stocks gained 6 percent. In August, when fuel prices fell for the first time in six months, the average return of the three stocks fell 10 percent.
So far in September, there hasn’t been a change in jet fuel prices, and the stocks have clocked gains. Clearly, investors are looking beyond jet fuel prices when it comes to aviation stocks.
