Eased ATF won’t bring down airfares: experts

Not just lower aviation turbine fuel (ATF) prices, even the government’s proposal to notify ATF as a ‘declared good’ will not have an immediate impact on air fares, say industry experts. Although some carriers have said that if the government would provide ‘declared goods’ status for ATF, they would immediately cut air fares, experts say most airlines have posted losses in the second financial quarter and are trying to improve business visibility at this point of time.
Says an expert working with a reputed financial services company, “Aviation is an industry characterised by intense competition and high cost structures. Even if the government announces easing of ATF tax load, airlines will have to balance their revenues and costing. Airlines will certainly be at an advantage as ATF contributes nearly 45% of their operating cost, but they have to first clear their dues to the AAI and oil marketing companies. It will take a while for airlines to slash fares.” It may be noted that airlines are currently looking at strategic benefits by bringing noticeable changes in the areas of revenue generation (on profit-making routes) and cost savings by discontinuing on loss making routes.
An executive from a Mumbai-based full service carrier opines, “We will look at the economic viability before taking any decision on reducing fares. As the peak winter season begins, carriers will utilise this opportunity to make up for their losses before they decide to slash fares.”
20/11/08 Shaheen Mansuri/Financial Express

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Categories: Indian Aviation- In General Nov 2008