The possibility of a cut in aviation fuel tax by India’s civil aviation ministry lifted shares of Jet Airways India for a third day in a row, with shares of the budget carrier SpiceJet rising in tandem.
Jet climbed as much as 6.8 per cent in Mumbai in intraday trading. The shares eventually closed 1.4 per cent higher at 289.65 rupees. SpiceJet closed 1.8 per cent higher at 18.95 rupees.
India’s benchmark BSE index fell 0.47 per cent, snapping its longest gaining streak since an eight-session rally to January 27.
According to reports in the Indian media, the aviation ministry is said to be looking at ways to reduce the tax burden on airlines. The issue was discussed between the aviation minister and the Maharashtra chief minister on Tuesday.
In the fourth quarter ended March 31, Jet managed to reduce its losses on the back of a fall in aviation fuel prices. Losses narrowed to 1.7 billion rupees from 2.15bn rupees a year earlier.
Jet’s shares had also risen on Tuesday after Bloomberg TV reported that Etihad had approached India’s aviation ministry for permission to raise its 24 per cent stake in Jet, adding officials are not keen on giving approval. That report cited unidentified government officials.
Etihad and Jet both denied the report.
India’s airlines have lost more than $10bn since 2009, according to Sydney-based Capa Centre for Aviation, hurt by below-cost fares and high taxes on jet fuel. The debt of airlines in India exceeds their revenue, Capa said in a report.
Mumbai-based Jet Airways sold the stake to Etihad in 2013, becoming the first Indian carrier to receive investment from a foreign airline after the government eased rules.
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