The SpiceJet MD says the weakening of the Indian rupee against the US dollar has further significantly impacted airlines as their substantial cost is either dollar-denominated or pegged to the dollar.

"The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares and we believe that a minimum 10-15% increase in fares is required to ensure that cost of operations are better sustained,” he adds.

The low-cost airline's stock is trading 6.36% down at ₹41.2 as compared to the previous session close of ₹44 on the National Stock Exchange (NSE). The stock opened down at ₹43 today and touched the intra-day low of ₹40.90, marginally up from its 52-week low of ₹40.85. Meanwhile, the share of the rival and industry leader IndiGo is also trading 4.49% or 76.5 points down.

The rupee is at its lowest level against the U.S. dollar amid persistent fund outflows by foreign investors and weakness in the equity market. Earlier this week, it hit an all-time low of 78.28 against the US dollar, recording a 5% decline against USD this year alone.

The fall in the rupee comes as Indian equity benchmarks – the Sensex and the Nifty 50 – record continuous declines. Today, the BSE Sensex benchmark has fallen 976.76 points, while the Nifty 50 has dropped 304.55 points to 15,387.

Ratings agency ICRA has maintained its “negative” outlook on the Indian aviation industry. While some airlines have adequate liquidity from a strong parent, for others, the credit metrics and liquidity profile remain under significant stress over the past few years. It has cautioned that rising aviation turbine fuel (ATF) prices and a general inflationary environment continue to dampen the industry earnings. “Elevated ATF prices aggravated by geo-political issues will remain a near-term challenge for the industry and will continue to weigh on the profitability of Indian carriers," it says.

ATF prices in Delhi

SpiceJet raises airfares by up to 15% on high ATF prices, weak rupee