JET FUEL PRICE SLASHED BY 7%

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State-run oil companies slashed prices of jet fuel by around 7%, but airline companies said they would use the opportunity to cover accumulated losses and may not lower air fares in the near term.

This is the eleventh reduction in aviation turbine fuel (ATF) since September 2008, helping it slide by around 61% since August last. ATF makes up nearly 40% of airlines’ operating costs. “We want to take a long-term view on ATF prices before taking a call. There is no major fare change on the anvil,” said a spokesperson for India’s biggest private airliner, Jet Airways.

Low-cost airliners that till recently were challenging full service carriers like Jet and Kingfisher with a fare war, too seemed to echo Jet’s views on fresh price cuts.

“We are not going for any fare revision at this stage. The drop in ATF will help the airline to recover from the huge accumulated losses faced,” said a spokesperson for the no-frills carrier SpiceJet.

Indian aviation sector witnessed a traffic slump of 9% in 2008 over the previous year. The seat factor (average passengers travelling per aircraft) has come down to around 64% in January this year from 73% in the corresponding period last year. The worst affected have been Kingfisher Red and Go Air. In the past airlines have been hiking fares and cutting capacity to cut mounting losses. Besides a base fare of Rs 1,000-1,500, airlines charge around Rs 3,000 as fuel surcharge and taxes per ticket sold in the domestic market.

Kingfisher Airlines, which operates flights under two brands — Kingfisher Airlines as the full service carriers and Kingfisher Red, a low-fare subsidiary — too has decided not to change fares. “There has been drop in ATF prices but other operating costs have been rising. We are paying high amount for lease rentals and our maintenance bill on aircraft checks have increased on the back of stronger dollar. There is no scope for any immediate fare revision. Hence, we have to wait for sometime before taking any decision,” said a company spokesperson.

The announcement will see price of ATF in Delhi fall by Rs 2,052 per kilolitre (KL) to Rs 27,106 per KL. In Mumbai it will come down from Rs 29,985 per KL to Rs 27,861 per KL. On an average, jet fuel prices have been cut by Rs 2,125 per kilolitre.

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