ATF futures contracts pare jet fuel price

The launch of aviation turbine fuel (ATF) futures contracts by the multi-commodity exchange (MCX) is showing much promise in helping to bring down the price of ATF for the aviation sector.
Just one month after MCX launched the contracts, the price of ATF traded on the exchange has fallen from Rs 76 per litre of aviation fuel on July 7 to Rs 64 per litre on August 8. With one month of trading showing so much promise, commodity analysts who did not want to be named were very optimistic saying that the new contracts may prove even more successful than petroleum contracts which are at present the most popular.
But airlines for which ATF is akin to lifeblood have still not entered ATF trading in full force and instead still testing the waters. The Indian commercial aviation sector is the single largest user of ATF after which comes the military and the general aviation sector. While fuel accounts for about 40% of airlines’ input costs, volatile international crude oil prices spill over into the ATF and industrial kerosene prices wreaking havoc on the airline’s bottom lines.
With the exponential growth in air traffic with introduction of many budget airlines, demand for ATF has increased exponentially. Consumption of ATF has increased by almost 77% in FY 07 over FY 01, said analysts from Angel Broking. India produces 7.8 million tonne of ATF, making the country self sufficient in production, with the ability to export 3.6 million tonne. ATF comes under the country’s kerosene market divided into three segments - public distribution system (PDS), industrial kerosene and ATF.
18/08/08 Shauvik Ghosh/Financial Express

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Categories: Indian Aviation- In General Aug 2008