The Hindu Business Line : ATF bill for airlines may be down by Rs 3-4 cr

THE domestic airlines industry could see a reduction of Rs 3-4 crore in its aviation turbine fuel (ATF) bill for November due to the public sector oil companies cutting prices by close to two per cent. However, there is near unanimity among the domestic airlines that the reduction in fuel prices will not lead to any reduction in airfares just yet.

The southward movement in global prices of oil in the recent past saw the public sector oil companies announce a reduction of up to Rs 747 per kilolitre or 1.85 per cent in the prices of ATF. The reduction in the four metros varied from Rs 747.96 per kilolitre in Chennai to Rs 648.96 per kilolitre in Delhi.

The reduction in ATF prices comes almost two weeks after the major airlines hiked their domestic airfares by 10 per cent mainly because oil prices had been spiralling upwards in the last few months. The increased airfares came into effect from October 14. Incidentally, this was the second time within the past few months that the airlines had hiked domestic fares.

However, almost all airlines feel that the reduction in ATF prices announced on Wednesday is too small for them to consider lowering airfares. "There will be no reduction in air fares as we did not raise fares when others did," said an Air Deccan spokesperson. Similarly, a spokesperson for the low-cost airline SpiceJet said there would be no reduction in airfares just yet.

"The reduction in ATF prices is negligible so how can we pass it on to the customers," a senior official of a private sector airline added. ATF accounts for between 30 per cent and 35 per cent of the operating cost of most major airlines.

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