Oil companies slash ATF price

Monday, September 1, 2008 at 4:09 am

In the biggest ever cut in jet fuel prices, state-run oil firms on Sunday (August 31) slashed aviation turbine fuel (ATF) prices by over 16% in step with softening international oil prices. The cut of Rs 11,784 per kilolitre is the single biggest reduction in the fuel price.

The oil marketing companies have done their bit by passing on every penny of the reduction in prices of jet fuel in international market, an official of the Indian Oil Corp, the nation’s largest oil firm, said.
Jet fuel prices in Delhi, which has the country’s second busiest airport, have been cut by Rs 11,378.19 per kl to Rs 59,650.07 with effect from midnight tonight (August 31). “We have always believed in passing on the benefit to consumers,” the official said.

The cut in ATF prices would put pressure on airlines to reduce airfares. Most of the airlines had raised airfares after the June 1 hike by over 18%, or Rs 10,839.16 per kl. But they did not cut fares when oil companies on June 5 cut fuel prices by over Rs 3,000 per kl. In subsequent two revisions, prices went up and have now been cut drastically.

ATF prices in Mumbai, the city with the nation’s busiest airport, have been cut by Rs 11,838.75 per kl to Rs 61,834.81 per kl. “The sharp fall in ATF price is on account of fall in prices of jet fuel in international market,” the official said.

State retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum revise ATF prices once a month based on the average price of jet fuel in the international market. Irrespective of clear indications of a likely fall in jet fuel prices from September 1, airlines across the board have announced a hike in airfares from next month.

Airlines in India pay the most for fuel when compared with other Asia Pacific hubs like Singapore, Hong Kong and Colombo, mainly on account of higher tax rates. Airlines in India pay an eight per cent excise duty, besides sales tax that varies from 20% (in Delhi) to 35%. ATF accounts for 35% of the total airline expenses.

Airlines unlikely to cut fares after fall in fuel prices

Meanwhile, the Indian carriers are unlikely to take any immediate steps to lower fuel surcharges as oil companies slashed jet fuel prices by 16% from Monday (September 1). “For the time being we do not want to change our pricing and surcharge strategy,” Jet Airways CEO Wolfgang Prock-Schauer said.

He said, “We want to see medium term development of ATF prices before we take a call. Even with this decrease, prices are significantly above the levels compared to six months ago.”

“What the industry needs now is that fuel prices remain at the same level for at least two months,” Spice Jet Chief Financial Officer Parathaswarathy Basu said. “We are studying the situation” was the response of a Kingfisher Airlines official. (PTI)

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

Oil companies slash ATF price

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