Fall in jet fuel prices may not bring down fares

New Delhi: Softening of the prices of jet fuel, better known as the aviation turbine fuel or ATF, is not likely to translate into a cut in airfares. State-owned oil firms on Thursday cut ATF prices by over 3% on the back of easing international oil rates, but airlines said they will not cut fares.
In Delhi, jet fuel rates were slashed by Rs 1,390 per kilolitre to Rs 40,099 per kl, in Kolkata it was cut by Rs 1,467 a kl to cost Rs 48,460 per kl, in Mumbai the rate was brought down by Rs 1,448 a kl to Rs 41,361 per kl, while in Chennai it was decreased by Rs 1,508 per kl to Rs 44,334 a kl, a senior Indian Oil Corporation official said. Fuel costs make up for roughly 40% of the operating cost of an airline, with Thursday’s cut easing the burden on Indian carriers.
When contacted, a spokesperson from the low-cost carrier SpiceJet said, “When the ATF prices rose for so many consecutive times in the past, we absorbed it. Now I don’t think we are going to slash airfare.”
ATF prices have risen on eight instances since March, with exception of two occasions, when rates were lowered.
National carrier Air India also said that it is not likely to cut airfare after the new ATF prices become effective from July 16.
16/07/10 Anindya Upadhyay/Economic Times

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Categories: Indian Aviation- In General Jul 2010