Airlines may not pass on benefit of fuel price cut to passengers

Airfares are not likely to come down despite a drop in jet fuel prices —the first time in the past two months—as a majority of India’s domestic airlines are consolidating their operations and looking to raise more money to support an aircraft acquisition spree, say analysts.
State-owned IndianOil Corp., the largest supplier of jet fuel in the country, reduced oil prices by about 2.3% on Friday, breaking a cycle of sustained increases mirroring a worldwide spike in crude oil prices. The prices, that are set on a monthly basis, were reduced to Rs38,163.23 per kilolitre from Rs39,059.45 per kilolitre last month, in Delhi.
“For the moment, there is some sanity in the (airline) market and we are not in favour of reducing prices,” said Ajay Singh, director of the low-fare airline SpiceJet Ltd, referring to a slowing of price wars between competing airlines. With Jet Airways Ltd taking over Air Sahara (now JetLite) and UB Holdings, which runs Kingfisher Airlines, buying a majority stake in the country’s largest low-cost carrier, Air Deccan, two of the most aggressive price cutters are now in larger airline companies that don’t necessary resort to price wars.
Kingfisher Airlines and Jet Airways also said they were yet to make a call on reducing prices.
31/08/07 Tarun Shukla/Livemint

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Categories: General Aviation Sep 2007