Business Daily from THE HINDU group of publications
Friday, Jun 06, 2008
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Business Daily from THE HINDU group of publications Friday, Jun 06, 2008 ePaper | Mobile/PDA Version | Audio |
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Petroleum Logistics - Airlines 'Aviation fuel price cut too small to reduce fares'
Our Bureau
New Delhi, June 5 The latest reduction of 4 per cent in the price of aviation turbine fuel (ATF) provides a relief of about Rs 3 per litre of fuel for the domestic airlines in the four metros. On Thursday, Indian Oil lowered the per litre price of ATF in Delhi to Rs 66.22 from Rs 69.22 charged on June 1 this year. Similarly, in Chennai, airlines will be charged Rs 72.36 per litre of ATF, down from Rs 75.60 per litre earlier this month. Indian Oil lowered the ATF prices after the Finance Ministry on Wednesday halved the customs duty on aviation fuel to 5 per cent. Airlines point out that it is difficult for them to reduce either the air fares or surcharges as ATF prices have been rising for the past several months. "In Delhi, airlines were paying Rs 45.49 per litre of ATF in January this year, which dipped slightly to Rs 44.71 per litre the following month. But from March, it has been rising again from Rs 47.04 per litre to Rs 53.30 in April, touching Rs 58.38 per litre in May," said an airline official. At the moment, ATF constitutes 45-50 per cent of the operating costs of domestic airlines. "The monthly fuel bill of IndiGo will be reduced by Rs 6.3 crore as a result of the latest reduction, which is certainly meaningful. However, it is relatively small to the price increase that was implemented last week, which raised our costs by Rs 22 crore per month," said Mr Bruce Ashby, IndiGo President and Chief Executive Officer. Pointing to the problems faced by industry, the Minister for Civil Aviation, Mr Praful Patel, said that between 2004 and 2008, while ATF prices rose five to six times, air fares on an average had declined, putting more pressure on domestic airlines. Fuel price spiral may squeeze airlines Tough days ahead for airlines ‘ATF duty cut: Marginal impact on fares’ Airlines asked to report on impact of aviation fuel duty cut on fares More Stories on : Petroleum | Airlines
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