Airlines to pocket ATF price cut benefit
Aviation turbine fuel (ATF) has become cheaper in Delhi by Rs 3,000 per kilolitre (kl) for domestic airlines and $54 per kl for foreign airlines
By TNN |
NEW DELHI: Oil companies have reduced the price of jet fuel by over 4% across the country. Aviation turbine fuel (ATF) has become cheaper in Delhi by Rs 3,000 per kilolitre (kl) for domestic airlines and $54 per kl for foreign airlines, following a 5% reduction in Customs duty on jet fuel. It is, however, unlikely that airlines would pass the benefit to the consumer.
Airlines have refused rollback in fuel surcharge at this point. They have maintained that the recent increase in fuel surcharge of Rs 300 on short-haul (up to 750 km) and Rs 550 on long haul-trips on domestic routes effective from June 3 will remain unchanged. The increase in the fuel surcharge was on account of a 19% increase in jet fuel prices.
Jet Airways CEO Wolfgang Prock-Schuer said, ���We are not reverting to a cut in the surcharge. Fuel bill has crossed 50% of operating costs for Jet Airways. The 4.3% reduction is minuscule and will not have a major impact on our operating costs.���
However, the move has come as a welcome relief for the airline sector that has been grappling with high ATF prices and will help improve bottomlines. Vijay Mallya-owned Kingfisher Airlines-Deccan combine has said it was studying the impact and would shortly arrive at a decision.
Low-cost carriers are following full-service carriers. SpiceJet COO Samyukth Sridharan said, ���There is no question of a rollback on fuel surcharge as the ATF price increase has been nearly 50% in three months and a marginal reduction of 4% would not make a difference.���
IndiGo CEO Bruce Ashby explained, ���IndiGo consumes 21,000 kl per month. Therefore, around 5%, or Rs 3,000.42 per kl, decrease will result in savings of Rs 6.3 crore per month. However, this is equal to less than a third of the 18-19% ATF price hike announced last weekend, which resulted in monthly cost increase for IndiGo at Rs 22 crore. We are not opting for a change.���
From Thursday, ATF in Delhi will cost Rs 66,226.66 per kl, down Rs 3,000.42 per kl, while in Mumbai, the price has been cut from Rs 71,759.06 per kl to Rs 68,626.87 per kl.
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