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Mumbai / Bloomberg
SpiceJet Ltd. is considering hedging jet fuel for the first time since 2009-10 as the Indian budget carrier expects crude oil prices to rise further, people with direct knowledge of the plans said.
Oil has surged more than 70 percent from a 12-year low reached in January on signs the global surplus will ease as US output declines. Indian budget airlines, including market leader IndiGo, do not usually hedge aviation turbine fuel. They were able to take full advantage of a crash in global crude prices unlike other carriers in Asia that suffered hedging losses.
SpiceJet has also renewed talks with private oil refiners to directly import jet fuel, as provincial taxes of as much as 30 percent make the fuel the costliest in Asia, the people said, asking not to be identified as the plans are private. Importing jet fuel directly can save 6-7 percent of the carrier’s fuel bill, one person said.
India in 2012 allowed airlines to use refiners’ infrastructure at airports to import jet fuel. Ajay Jasra, a spokesman at SpiceJet, didn’t immediately respond to an e-mail seeking comments.