Aviation stocks continued their downward trajectory for the second consecutive session on Wednesday, September 2, as oil prices surged above $92 per barrel amid escalating tensions between the United States and Iran in West Asia. According to latest market data, IndiGo shares opened at ₹4,957 apiece and declined nearly 3% to an intraday low of ₹4,908.50, while SpiceJet shares, after opening at ₹10 apiece on BSE, lost 4% to today's low of ₹9.60. At 12:02 PM, IndiGo was down 2.41% to ₹4,930 per share on the National Stock Exchange, while SpiceJet was seen at ₹9.8 per share, falling 1.9%. Since the beginning of the year, IndiGo's shares have slipped nearly 4%, and its market capitalisation stands at ₹1.9 lakh crore, while SpiceJet, with a market capitalisation of ₹1,486.42 crore, has tanked 67% so far since the beginning of 2026. The Nifty 50 shed around 200 points and the BSE Sensex fell as much as 560 points at mid-session, hammered by Brent crude that has stayed above $92 a barrel since the Iran-US standoff escalated in late August.
Despite the continued stock decline, the government has marginally reduced the windfall gains tax on ATF for the next fortnight, providing some relief to airlines. As per latest reports, the rate of special additional excise duty (SAED) on export of aviation turbine fuel (ATF) has been set at ₹19 per litre, compared to ₹19.5 per litre earlier. This comes after ATF prices were increased by 5.46%, in line with a rise in their international benchmarks, with the price of jet fuel or ATF raised by ₹6.28 per litre, or 5.46%, to ₹121.28 per litre for domestic airlines. The two increases will add to the financial burden of airlines, for whom ATF makes up to 40% of operating costs. ATF prices for domestic routes in August 2026 have increased by around 20% on a year-on-year basis, following the ₹5,000 per kilolitre hike announced by oil marketing companies, which is likely to exert additional cost pressure on airlines.
Global crude oil prices surged above $92 per barrel amid recent escalations between the United States and Iran in West Asia, making investors turn cautious for the sector. According to previous reports, Brent crude, the global oil benchmark, was trading higher by 1.06 per cent at USD 95.65 per barrel amid concerns over disruptions to crude supplies through the Strait of Hormuz. US strikes on Kharg Island oil terminals knocked a significant share of Iran's export capacity offline and drove a wave of insurance premium increases on tankers still risking the route. Oil marketing companies including Bharat Petroleum, Hindustan Petroleum, and Indian Oil Corporation slid as their refining margins narrowed, while airline stocks, including IndiGo parent InterGlobe Aviation and SpiceJet, remained under pressure from jet fuel costs rising in lockstep with the Hormuz premium now embedded in every barrel. India imports roughly 85 percent of its crude oil requirement, turning every Brent spike into a direct tax on corporate margins across aviation, chemicals, transportation, and refining sectors.
According to VK Vijayakumar, chief investment strategist at Geojit Investments, "Several sectors are directly affected if crude oil prices spike. Fuel accounts for nearly 30-40 per cent of airline operating costs." He added that if oil prices remain elevated, this could impact the margins. "The aviation sector has been impacted because of two things. One, the revision in ATF prices by the government. The hikes will add to the financial burden of airlines. Secondly, crude prices have again shot up by 5 per cent overnight due to the escalation of tensions in West Asia," Vijayakumar explained. In the first quarter of the current fiscal (Q1FY27), InterGlobe Aviation had reported a net loss of ₹238 crore, impacted by higher fuel prices and the West Asia conflict. IndiGo shares have remained under pressure since the start of the West Asia conflict in February, with the stock declining 4% on a year-to-date basis.
Virat Jagad, senior technical research analyst at Bonanza, noted that IndiGo is showing short-term weakness after rejection from the ₹5,200–5,250 resistance zone and is slipping below major short-term EMAs, as reported by Business Standard. "Avoid fresh buying currently. ₹4,888 is major support. A breakdown below ₹4,888 can trigger ₹4,750–4,600 levels," he said. Despite the current challenges, analysts said the key monitorable will be the airline's ability to manage the higher fuel costs, with the company having previously introduced fuel charges on both domestic and international routes after a sharp spike in oil prices.
