Airlines are lobbying with the government for a more transparent system to fix the cost of jet fuel, based on the Mean of Platts Arab Gulf (MOPAG) model, which may help bring down prices in the long run.
MOPAG is an international benchmark for pricing crude and products designed by Platts, a price assessment agency.
Jet fuel, also known as aviation turbine fuel (ATF), accounts for about 40% of the operating cost of domestic carriers. Any change in its price will have an impact on the airlines.
“Many big European carriers are benefiting from the MOPAG system, while Indian carriers are hit by price revision by oil marketing companies in every 15 days,” said a senior executive at private airline. He did not want to be identified.
An executive at state-run Air India Ltd said his airline is also lobbying for a MOPAG-based pricing system.
Airline lobby group Federation of Indian Airlines secretary general Anil Baijal said the group is not leading the demand, “but airlines may be separately asking for it”.
State-run oil marketeers did not comment for this story.
There are two pricing models for jet fuel supply in India—the MOPAG model and the model followed by state-run oil marketing firms, in which prices are changed every fortnight.
The MOPAG model factors in the price of crude, a supplier mark-up and a third-party fee for using common fuel supply infrastructure in airports.
14/04/11 P.R. Sanjai/Live Mint
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