Jet Airways' fuel use drops 75%, may spell slow burn in ATF sales

According to reports, 90% of Jet Airways' fleet of 120 aircraft was grounded in the last one month

The collapse of Jet Airways has not only hurt its employees and put legions of passengers in a fix — it has also dealt a huge blow to the sales of aviation turbine fuel (ATF), which was on an unbroken upward trend for 51 months till February 2019. 

A senior oil-marketing company (OMC) official said that fuel consumption by Jet Airways declined by around 75 per cent in the space of just one month. The grounding of Boeing 737 MAX planes has also added to the slump in the overall consumption of ATF.      

According to reports, 90 per cent of Jet Airways’ fleet of 120 aircraft were grounded in the last one month. The beleaguered airline is now operating only seven aircraft. Last week the Prime Minister’s Office called an urgent meeting with aviation ministry officials to take stock of the situation. 

“When the airline was operating 120 planes, it used to consume around Rs 11.2 crore worth of aviation fuel from us per day. This dropped to Rs 2.5-3 crore a day last week,” said an Indian Oil Corporation (IOC) official. The state-run OMC had refused to supply Jet Airways fuel for a couple of hours a few times last week, reportedly because of non-payment of dues. 

Sources said the airline was currently paying a lump sum on a routine basis for continued supply of fuel. “There is no bank guarantee involved at present. It is availing of our services in return for all-cash payments,” the IOC official revealed. 

A consortium of lenders, led by the State Bank of India, is considering a proposal to infuse Rs 1,000 crore into Jet Airways to meet its working expenses. 

Needless to say, the drop in the consumption of fuel by Jet Airways will have an impact on overall ATF sales for the month as well. A report by the Petroleum Planning & Analysis Cell says that the 51-month run of positive growth in ATF consumption ended in February 2019. Between February 2018 and February 2019, there was a 10.6 per cent rise in consumption, and a 9.7 per cent rise on a cumulative basis for the April 2018 to February 2019 period, compared to April 2017 to February 2018.

According to the data from the Directorate General of Civil Aviation, there were 23,856 million domestic air passengers between January 2019 and February 2019, against 22,209 million during the corresponding period of the previous year — which translates into a growth of 7.42 per cent. 

Moreover, between April 2017 and February 2018, and April 2018 and February 2019, the number of passengers increased by 15.1 per cent.  

India is expected to become the world’s largest domestic civil aviation market in the next 10-15 years on the back of favourable factors such as the country’s growing population and rising incomes, among others.