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Over the past month, the SpiceJet stock has gained about 22 per cent while IndiGo and Jet Airlines are up 18-19 per cent. Two factors have primarily helped. One, the sharp fall in oil prices in recent times to about $45 a barrel due to the ongoing turmoil in West Asia, means cheaper aviation turbine fuel (ATF), the major cost of India carriers.
Next, reports suggest that yields (average fares) that had been under pressure in the last year have been looking up in recent months.
The SpiceJet stock also benefited from news of recent big orders for aircraft it placed at the Paris air show.
The sharp run-up in the stocks though has made them quite pricey with valuations much above historical averages.
Also, weakness in financial performance seen last fiscal may continue with huge capacity additions likely to keep fares subdued. Besides, cost benefits from cheaper crude and a stronger rupee could reverse.
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