Jet fuel gets cheaper, but no cut in fares on cards

New Delhi: As a result of crude oil prices falling to a four-year low of around $40 a barrel last fortnight, public sector oil companies today cut aviation turbine fuel (ATF) prices by 11 per cent. The rates will be effective this fortnight. The current rates were set on December 1. This is the seventh consecutive cut in ATF prices since September.
However, after a cut in fuel surcharge announced less than a fortnight ago, Indian carriers are not willing to reduce fares.
“...Price cut is a subject that we keep monitoring,” said a spokesperson of National Aviation Company of India Ltd (Nacil), which owns national carrier Air India.
After Air India, which announced 14.5 per cent cut in fuel surcharge on December 1, Jet Airways, Kingfisher, SpiceJet and IndiGo had announced similar cuts, bringing down overall ticket prices by 9 per cent. Indian carriers have cut average ticket prices by 23-28 per cent since September.
The spokesperson said 70 per cent of the airline’s costs were in dollars and the weakening of the rupee in the last few months would have taken away around 20 per cent of the benefit of the recent fall in crude oil prices.
A Kingfisher Airlines spokesperson said they “will evaluate the impact of this announcement and take a view”.
Low-cost carrier SpiceJet CEO Sanjay Aggarwal said there would not be a further price cut at least for now.
The airline industry has been lobbying the government to give ATF the status of a declared good so that the state-level levies on the fuel do not exceed 4 per cent. Currently, sales tax on ATF can be as high as 25 per cent.
16/12/08 Business Standard

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Categories: Indian Aviation- In General Dec 2008