Aviation fuel to cost less, but airlines against fare reduction

New Delhi: Domestic air travel will not become cheaper despite oil companies reducing the price of aviation turbine fuel (ATF) by as much as 16 per cent mainly on account of fall in international ATF prices. The only other time this year when ATF prices fell was in February.
Indian Oil on Sunday announced that from September, domestic airlines picking up ATF in Delhi will be charged Rs 59.65 a litre, down from Rs 71.02 a litre charged in the previous month. Similarly, in Chennai, airlines will pay Rs 65.49, (Rs 77.66 a litre), while in Mumbai, airlines will be charged Rs 61.83 a litre instead of Rs 73.67.
ATF accounts for about 45-50 per cent of the operating costs of most domestic airlines. The increase in crude prices has seen the industry either increase fuel surcharge or basic fares.
However, arguing against any immediate decrease in airfares, airline officials point out that while ATF costs have increased by about 90 per cent between October 2005 and July this year, fares of full-service airlines on the Delhi-Chennai sector have increased by just 27 per cent, while fares in the Delhi-Kolkata sector have risen by 1 per cent.
“For the time being, we do not want to change our pricing strategy. We want to see medium term development of ATF prices before taking a call.
31/08/08 Business Line

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Categories: Indian Aviation- In General Sep 2008