There is often many a slip between the cup and the lip. The story of the aviation sector in India over the past year bears testimony to this. Just when the skies seemed to be clearing and airlines had started posting profits after years of losses, a sharp increase in the price of crude oil once again played party-pooper.

Players across the sector, including listed low-cost carrier SpiceJet, felt the pinch. The company which saw a management change in June 2010, had shown profits for five quarters in a row till December 2010. This was on the back of improving demand dynamics, a preference for low cost air travel, reasonable fuel prices, and a strong balance sheet with negligible leverage.

However, with crude oil again crossing the $100 a barrel mark, and sharply pushing up fuel cost which could not be offset by higher fares, SpiceJet found itself slipping into the red in the March quarter. This, despite buoyant demand which saw the company improve both its passenger count and market share.

The stock which had rallied strongly for most of calendar 2010 has slipped almost 68 per cent from its November 2010 peak of Rs 92. Adding to the stock's pain was the discount attributed by markets to the company's alleged connections to out-of-favour players in the political arena.

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