Aviation fuel prices cut by 4%

Aviation turbine fuel (ATF) will now cost Rs 66,226.66 per kilolitre (kl) in Delhi, down 4.33 per cent from Rs 69,227.08 per kl. This pushed up the share prices of of airline companies by as much as 7.3 per cent.

The reduction ATF prices will, however, not result in lower air fares. The over 18 per cent rise in ATF prices on June 1 had lead to Jet Airways and Kingfisher increasing air fares by 8-10 per cent.

 

A Jet Airways spokesperson said that after the steep rise on June 1, today's cut was too minuscule to make any impact on an airline's costs.

Budget carriers SpiceJet, GoAir and IndiGo said there would be no decrease in fuel surcharge on air fares as they had not increased fares when jet fuel prices rose at the beginning of this month.

"We did not increase the fuel surcharge and therefore question of reduction does not arise," said GP Gupta, chief financial officer of GoAir.

High fuel prices are expected to push airlines deeper into the red with the industry losses for the 2008-09 fiscal expected to touch Rs 8,000 crore, double the losses reportedly incurred during 2007-08. Apart from measures like refuelling at states where ATF is cheaper, airlines like SpiceJet and IndiGo have renewed their efforts to push for relaxation of rules for flying international routes.

Airlines said that international operations would lead to better utilisation of aircraft as well as cost effective upliftment of jet fuel, which is 75 per cent cheaper abroad. The airlines informed the civil aviation ministry yesterday that they would have no option but to prune domestic capacity by 20 per cent.