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ATF falls but not airfares

business Updated: Jan 02, 2015 00:02 IST
HT Correspondent
HT Correspondent
Hindustan Times

Aviation turbine fuel (ATF) prices were slashed by a steep 12.5% while non-subsidised domestic cooking gas (LPG) became cheaper by Rs 43.50 per cylinder Thursday on the back of falling global crude prices.

But, the reduction in jet fuel prices may not bring down airfares immediately thanks to the vacuum created by SpiceJet’s drastic scaling down of operations, said experts.

The number of daily flights operated by SpiceJet is down by 115. The airline is operating 230 daily flights, down from 345 in July last year. The approaching lean travel season, however, may bring down the fares.

“With the lean travel season set to kick in, there will be some reduction in fares. January-March is traditionally one of the leanest periods for travel and airlines often come up with discount offers before travel picks up again in May,” said Subhash Goyal, chairman of STIC travel group.

In the sixth straight reduction in jet fuel rates since August 2014, ATF prices in Delhi were cut by Rs 7,520 per kilolitre to Rs 52,423 per kilolitre.

SpiceJet COO Sanjiv Kapoor tweeted that the reduction in ATF prices would provide much needed relief for airlines. “Much needed relief given high cost of operations in India."

Jet fuel constitutes over 40% of an Indian airline’s operating costs and the series of rate cuts have provided a breather to bleeding Indian carriers as it will help them bring down their cost of operations.

Shares of Jet Airways surged 9.08% to close at Rs 419.10 on the BSE while SpiceJet gained 4.94% to close at Rs 18.05.