Logistics

Aviation fuel prices drop by 10%, but airfares may not decline

Our Bureau New Delhi | Updated on March 01, 2020

The domestic price of aviation turbine fuel (ATF) dropped by around 10 per cent on Sunday but there was no word on domestic airlines cutting fares.

The latest decline is said to be the biggest fall in ATF prices in the last four or five months, airline officials said.

Domestic airlines declined to comment on the ATF price dip, claiming that they had not received any official notification. Till about 6 pm, the IOC website was showing prices in rupees per kilolitre for domestic and international airlines, which was applicable from February 1 this year.

The downward revision comes at a time when the domestic industry is bracing for a traditionally tepid quarter, when air travel takes a backseat, thanks to school examinations and corporates being busy with the financial year-end.

Industry watchers say domestic airfares move in sync with market conditions and not cost of inputs.

“Our fares are already competitive, taking into account the varying market conditions. It is difficult to immediately say whether any airline will drop fares or not,” said a senior airline official, on condition of anonymity.

Given the price sensitivity of the Indian market, usually when one airline cuts fares, others follow suit.

Coronavirus impact

The fortunes of domestic airlines are also likely to be hit by the coronavirus outbreak, which has impacted global air travel.

Aloke Bajpai, CEO & co-founder, ixigo, said the decrease in jet fuel prices will offer some relief to airlines, which are currently under pressure due to flight cancellations, suspensions and declining airfares.

“Lowering fuel prices will allow airlines to manage their operating costs and bring some respite on the cost front,” he added.

Published on March 01, 2020

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