Airline stocks traded with big gains ahead of the Group of Ministers (GoM) meeting on aviation today.
The inter-ministerial panel headed by Pranab Mukherjee is likely to consider a proposal to allow foreign airlines to buy into domestic carriers. Jaipal Reddy, Anand Sharma and Ajit Singh are part of the GoM.
Jet Airways ended trade with over 10 per cent gains on the Bombay Stock Exchange. SpiceJet share prices too surged over 10 per cent to close at Ra 22.35 while Kingfisher Airlines advanced 4.80 per cent in trade.
A Committee of Secretaries had recommended allowing 49 per cent foreign direct investment (FDI) by foreign airlines. Earlier, the DIPP under the commerce ministry had floated a draft Cabinet note for 26 per cent FDI by foreign carriers.
Foreign airlines are currently barred from investing in Indian carriers though foreign investors are allowed to pick up to 49 per cent stake.
The GoM is also expected to take up the recommendation of allowing airlines to import aviation turbine fuel (ATF) directly rather than buying from oil marketing companies. The Committee of Secretaries had recommended direct import of jet fuel.
Carriers like Kingfisher have been advocating for direct import of ATF as this will help reduce their fuel cost. Airlines pay sales tax in the range of 4-28 per cent on ATF which accounts for 40 per cent of the operational cost of airlines.
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