The recent rise of the US dollar against the rupee has triggered a rather sharp rise in the price of aviation turbine fuel, or ATF. In the past one month, ATF prices across the four metros have surged 5.8% on average, thanks to the stronger greenback, which made the import of crude oil expensive.
This spike in ATF prices will be a double whammy for domestic airlines, which were battling low passenger traffic for the five months ended May. In Mumbai, ATF price rose 5.8% to Rs 68,147 per kilolitre in a month. Passenger traffic grew only about 1% in the five months ended May. With clear indications that revenue growth will be subdued in the quarter to June 2013, the rise in ATF prices will further squeeze aviation companies' margins.
Typically, a rising US dollar is a worry for airlines as a large chunk of their expenditure is in US dollars, with salaries to pilots, leasing charges, engine and aircraft maintenance charges, all paid in the foreign currency.
03/07/13 Rajesh Naidu/Economic Times
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This spike in ATF prices will be a double whammy for domestic airlines, which were battling low passenger traffic for the five months ended May. In Mumbai, ATF price rose 5.8% to Rs 68,147 per kilolitre in a month. Passenger traffic grew only about 1% in the five months ended May. With clear indications that revenue growth will be subdued in the quarter to June 2013, the rise in ATF prices will further squeeze aviation companies' margins.
Typically, a rising US dollar is a worry for airlines as a large chunk of their expenditure is in US dollars, with salaries to pilots, leasing charges, engine and aircraft maintenance charges, all paid in the foreign currency.
03/07/13 Rajesh Naidu/Economic Times
