Mumbai: With Brent crude prices touching the $57 per barrel level, Indian oil marketing companies on Thursday reduced jet fuel (ATF) prices by 12.5 per cent but this is not going to translate into lower airfares. Aviation Turbine Fuel prices have reduced by 26 per cent from the June 2014 level, while crude prices have crashed over 50 per cent.
Airlines in India, suffering from high losses by running below cost of operations, are unwilling to pass on the benefits to air passengers. “Had we run a super-profitable business, we could have reduced fares. Currently, all fares are below cost. Revenue per km in a sector like Delhi and Mumbai is maximum Rs. 7, which is far cheaper than auto and taxi fares. Fares in India are market-driven not cost-driven, so we are incurring heavy losses. With jet fuel prices moderating, we will recover some losses. There is no scope for slashing airfares,” said the finance head of an airline.
Airline officials said airfares in India were already low compared to U.S. and other countries and there was no leeway to cut fares.
02/01/15 Lalatendu Mishra/The Hindu
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Airlines in India, suffering from high losses by running below cost of operations, are unwilling to pass on the benefits to air passengers. “Had we run a super-profitable business, we could have reduced fares. Currently, all fares are below cost. Revenue per km in a sector like Delhi and Mumbai is maximum Rs. 7, which is far cheaper than auto and taxi fares. Fares in India are market-driven not cost-driven, so we are incurring heavy losses. With jet fuel prices moderating, we will recover some losses. There is no scope for slashing airfares,” said the finance head of an airline.
Airline officials said airfares in India were already low compared to U.S. and other countries and there was no leeway to cut fares.
02/01/15 Lalatendu Mishra/The Hindu
