ATF prices cut again, but fall in air fares uncertain

Cash-strapped airlines on Monday got another breather when state-run oil firms further cut jet fuel prices but they remained non-committal on slashing fares.

State-run oil firms cut jet fuel prices on Monday by up to Rs 2,100 per kilolitre on top of the 17 per cent reduction announced last week.

Jet fuel, or aviation turbine fuel, at Delhi will cost Rs 44,965.70 per kl with effect from midnight tonight, a four per cent cut over the present Rs 47,017.93 per kl, an industry official said.

The reduction, which comes on top of 17 per cent cut of November 1, followed Government exempting the fuel from payment of 5 per cent customs or import duty.

Airlines, however, did not immediately say if the overall 20 per cent reduction (Rs 11,482.10 per kl) in jet fuel prices in three days will result in lowering of fares. Some of the airlines said they were "studying" the impact.

They had reacted the same when Indian Oil, Bharat Petroleum and Hindustan Petroleum had from November 1 cut ATF price in Delhi by Rs 9,429.87 per kl to Rs 47,017.93 per kl, in line with fall in international oil prices.

The decision to scrap customs duty in order to reduce base price of ATF was one of the demands leading private players Jet Airways and Kingfisher Airline had put foward to overcome their financial woes. High fuel cost and economic slowdown had cut deeply into their profitability, leading to even defaults in payment of ATF bills.

Jet fuel in Mumbai, home to the nation's busiest airport, will cost Rs 46,518.85 per kl as against Rs 48,656.59 per kl presently, the official said.

The price cuts this month follow similar reductions on September 1 and October 1. Cumulatively, prices are down close to 40 per cent from the peak reached in August.

Source: ndtvprofit