The Hindu Business Line : Karvy Comtrade to advise SpiceJet on ATF hedging

New Delhi, Sept 1 Karvy Comtrade Ltd, a commodity brokerage company, on Monday announced that it has bagged the account of the Delhi-based low cost airline, SpiceJet, for advising it on strategies to hedge its aviation turbine fuel requirement on MCX platform.

The move is likely to see the airline offer lower fares to its passengers.

The company will be doing a surrogate hedging by participating in crude oil contract which has very high correlation with ATF prices, a statement issued here states.

Better margins

The airlines Chief Financial Officer, Mr. Parthasarathi Basu, said that the strategic tie-up will help the airline operate with better margins which will help SpiceJet offer better prices to the customer.

“We will not be impacted by the volatility in fuel prices because of the hedging strategy that the airline proposes to initiate and this would definitely benefit our customers,” Mr Basu added.

Talks with others

Karvy is also in talks with various other airlines on making available its advisory and research on ATF and crude oil.

The move comes as the airline industry is expecting to post losses of around Rs 4,000 crore mainly on account of rise in global crude prices. SpiceJet reported a net loss of Rs 102 crore for the first quarter mainly on account of a 132 per cent increase in ATF prices. The airline had reported a profit of Rs 18.5 crore during the same period in the previous year.

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