It is now cheaper to fuel an aeroplane than to tank up your car, either with petrol or diesel.
Prices of jet fuel or aviation turbine fuel (ATF) were reduced by a steep 11.3% on Sunday, making petrol and diesel cheaper for the first time. The latest cut in ATF prices is also likely to lead to a reduction in airfares even though no immediate announcements were made by any airline.
HT had reported on January 27 that domestic carriers, which have been battling heavy losses and high debt, are likely to turn profitable in the October-December quarter due to lower jet fuel prices.
“ATF (or jet fuel) rates have been further cut by 11%... While ATF rate in Delhi at Rs 46.8k per kl (from 52.7k) is still 50% higher than 2009, but it is a great relief for airlines,” SpiceJet COO Sanjiv Kapoor tweeted. “Ticket prices in India are amongst the cheapest in the world, and fuel prices amongst the most expensive. Correction was much needed,” he said.
The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 5,909.9 per kilolitre, or 11.27%, to Rs 46,513.02 per kilolitre, oil companies said on Sunday.
After the steep reduction, ATF will cost Rs 46.5 a litre — Rs 1.76 a litre cheaper than diesel and Rs 12.41 a litre less than petrol. In Delhi, petrol costs Rs 58.91 a litre and diesel is priced at Rs 48.26 per litre.
“January-March is traditionally one of the leanest periods for travel,” said Rajji Rai, chairman, Swift Travels. “Airlines are most likely to slash fares to increase occupancy considering that ATF prices have fallen further. Already, a number of discount offers have been announced by domestic carriers,” Rai added.
The reduction, one of the steepest ever, of Rs 7,520.52 per kl, or 12.5%, effected from January 1, has led to ATF becoming cheaper than even diesel.
Last month, the rate of ATF had fallen below the price at which petrol is sold..
While petrol and diesel prices have so far not been changed, non-subsidised domestic cooking gas (LPG) was cut by Rs 103.5 per cylinder to Rs 605 a cylinder after international oil prices slumped to near six-year lows.
ATF attracts an excise duty of 8%. The cut, effective today, is the seventh reduction in jet fuel rates since August.
Jet fuel constitutes over 40% of an airline’s operating costs and the price reduction will ease the financial burden of cash-strapped carriers.