Jet Airways, Rivals Gain on India Jet-Fuel Price Cut

Jet Airways (India) Ltd. and Kingfisher Airlines Ltd., the nation's two-largest domestic carriers, rose in Mumbai trading after the country's biggest oil refiner cut jet-fuel price for the second time this month.
Jet Airways gained as much as 11 percent to 164.95 rupees, the highest in almost a month, and changed hands at 163.40 rupees at 11:22 a.m. in Mumbai. Kingfisher rose as much as 12 percent and budget airline SpiceJet Ltd. advanced 8.9 percent.
Indian Oil Corp. reduced the price of jet fuel in Mumbai, home to the country's busiest airport, 12 percent from today as oil prices decline worldwide. The airlines may need to reduce fares 15 percent to attract travelers as an economic slowdown and higher ticket prices damp travel demand, said Mahantesh Sabarad, a Mumbai-based analyst at Centrum Broking Pvt.
``Airlines will have to drop fares substantially to boost traffic,'' said Sabarad in a phone interview today. ``They need to increase passenger traffic rather than keeping their aircraft idle.''
India's domestic air traffic slid 1.9 percent between January and October to 34.7 million, according to Indian government data. The number of domestic passengers had risen 32.5 percent in 2007 and 46.5 percent in 2006.
Indian airlines are carrying fewer passengers as the nation's economic growth slows. Growth may slow to as much as 7 percent, the weakest pace since 2003, in the year to March 31, the government has said.
Indian Oil will sell fuel to airlines at 33,719.46 rupees ($223) for 1,000 liters, the lowest price in three years.
16/12/08 Vipin V. Nair/Bloomberg

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Categories: Indian Aviation- In General Dec 2008, Jet Airways Dec 2008