The Hindu Business Line : Airlines to cut fares as ATF prices fall

FLYING in the domestic skies is all set to become marginally cheaper. Within hours of oil companies announcing a reduction in prices of aviation turbine fuel (ATF), a host of airlines including Air Deccan, Air Sahara, and the start-up SpiceJet announced that they would reduce domestic fares.

A spokesman for IOC said that the price of ATF had come down by as much as Rs 3,200 per kilolitre in the domestic market.

While SpiceJet will reduce fares by "2-3 per cent", according to the airline's Director, Mr Ajay Singh, both Air Deccan and Air Sahara are working on details of the reduction and will announce them shortly.

"The benefit in cost that the airline will derive by reduction in prices of ATF, will be passed on to the passengers. In fact, in April, when the ATF prices were hiked by 10 per cent, and all the other airlines hiked fares, we were the only airline to absorb it," said Mr G.R. Gopinath, Managing Director of Air Deccan.

Other airlines, however, said that it was still too early to comment on fare cuts.

According to aviation officials, one of the main reasons for this is that it is not immediately clear how long ATF will be available at reduced rates.

"If the oil companies increase the ATF prices, then what will we do? We cannot be in a situation where the price of an air ticket varies from month to month," said an airline official.

ATF constitutes almost 30 per cent of the cost of operation of most domestic airlines.

The reduction in prices is mainly on account of a decline in prices in international markets.

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