Costlier ATF causes 80% of aviation losses

Mumbai/New Delhi: Indian airlines today filled aviation turbine fuel (ATF) into the tanks of their aircraft at Rs 68,000 a kilolitre. Around the same time, ATF sold at $1,037.8 (Rs 41,500) a kilolitre at the Singapore airport — full 39 per cent below Indian prices.
The bottom line is clear: Higher ATF prices are largely responsible for the red ink on the books of Indian airlines. While Civil Aviation Minister Praful Patel reckons the industry will end the current financial year with losses of Rs 8,000 crore, up from Rs 4,000 crore in 2007-08, aviation consultancy Centre for Asia Pacific Aviation estimates the losses could be still higher at Rs 10,000 crore.
If the oil marketing companies price ATF at the current global prices, the airlines will be able to substantially pare their annual losses. Here's how: A saving of Rs 26,500 per kilolitre on annual consumption of 2.5 million kilolitres results in savings of Rs 6,625 crore.
"A reduction in ATF price by Rs 20,000 a kilolitre (from Rs 68,000 today) could help the airline save Rs 400 crore in its annual fuel bill, said SpiceJet CFO Partha Sarathi Basu. Full parity with international prices will help the company, which has an 11 per cent share of the market, do still better.
Analysts, however, said that such a cut in ATF prices will not mean all airlines will come out of the red.
26/06/08 Ranju Sarkar & Anirban Chowdhury

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Jun 2008