Monday, October 01, 2018

India’s struggling airlines have just received another crude blow

Battered by a constantly depreciating rupee and rising costs, the last thing India’s airline companies needed right now was a hike in aviation turbine fuel (ATF) price.

But that’s exactly what the country’s state-run oil marketing companies (OMCs) have gifted the beleaguered passenger carriers. Today (Oct. 01), the OMCs increased ATF prices by 7.25%.

“(ATF) domestic prices in pan-India have been revised upward effective 1st October 2018 on account of higher jet fuel prices in the international market coupled with (the) weakening of Indian rupee as against US dollar (exchange fluctuation),” Indian Oil Corporation said in a press release.
The OMCs have not included the 5% customs duty levied by the government in the latest revision. Now, a kilolitre of ATF is priced at Rs74,177 in Mumbai. In Delhi, it is expected to cost around Rs74,530 per kilolitre.

This level was last seen four years ago in March 2014 and is just a little short of the all-time high of Rs77,089 (in Delhi) that was seen in October 2013.

“The twin impact—7.3% hike in ATF and crashing rupee—is going to be devastating for us as most costs of airlines (like aircraft lease rentals and maintenance contracts) are in dollars. Oil companies have informed us of the steepest hike in recent times from Monday. Jet fuel prices in India for domestic flights are already the highest globally,” an airline official told the Times of India newspaper.
01/10/18 Kamalika Ghosh/Quartz

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