Wednesday, May 10, 2017

Cheaper local flights to eat into jet fuel exports

India’s record jet fuel exports may fall this year as an expanding middle class and cheaper air travel boost local consumption, refinery executives and analysts told Reuters, potentially raising ailing profit margins for the fuel.

Prime Minister Narendra Modi last month launched the first flight under the Regional Connectivity Scheme that is designed to spur air travel between smaller Indian cities that are currently under-served and to make flying more affordable. The government will cap fares under the scheme and offer airlines incentives to fly less traversed routes.

The plan should eat into the country’s jet fuel exports, which rose to a record of 7,41,000 tonnes in March, according to preliminary government data. The expected decline in exports could help raise jet fuel margins, which plunged to a nine-month low earlier this month, said three middle distillate traders.

India’s efforts to connect regional routes and the expansion of aircraft fleets will continue to boost local demand for jet fuel, said Sri Paravaikkarasu, head of East of Suez Oil at energy consultants FGE.

India’s jet fuel demand is expected to rise by 11 per cent in 2017 after rising last year by 13 per cent, or about 15,700 barrels per day (bpd), she said.
10/05/17 The Asian Age