Airlines to gain from falling crude price

Two days ago state oil companies reduced aviation turbine fuel price by 3%

Drop in crude oil price is a positive for the troubled domestic airlines that saw a surge in losses in the last financial year. State oil companies had reduced the price of aviation turbine fuel (ATF) by three per cent just two days ago. In Delhi, the domestic ATF now costs Rs 67,525 a kilolitre, the lowest since July last year.

Fuel accounts for as much as 35-40 per cent of the operational cost of an airline. Moreover, dollarised costs (including fuel, paid for in dollars at the time of import) are 60-70 per cent of the total cost. In the previous financial year, airlines consumed about 5.5 million tonnes of ATF, with a bulk of sales taking place at the airports in Delhi, Mumbai, Bangalore, Chennai and Hyderabad.

For 2013-14, Jet Airways’ fuel bill rose 2.6 per cent  to Rs 7,175 crore, compared to that of 2012-13. SpiceJet’s fuel expenses jumped 30 per cent to Rs 1,053 crore during the same period, impacting profit.