SpiceJet to lower fares only if fuel prices settle | india | Hindustan Times
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SpiceJet to lower fares only if fuel prices settle

india Updated: Sep 01, 2008 17:35 IST

IANS
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Low-cost carrier SpiceJet will reduce fares only if aviation fuel prices remain stable over the next two-three months, a top airline official said on Monday.

"At this point of time, we are not reducing fares. But if the ATF (aviation turbine fuel) prices remain stable for the next two-three months we would definitely do so," SpiceJet's chief commercial officer Samyukta Sridharan told IANS.

As aviation fuel accounts for 35 per cent of an airline's expenses, a hike in its price automatically pushes up operational costs of a carrier, leading to airfare hikes. Fares of airlines across the board have jumped over the last few months.

"There has been an increase of 47 per cent in the ATF prices between March and June this year," Sridharan said.

He said the ATF prices have been generally volatile, and that it was prudent to wait and watch before passing on price reduction benefits to customers. "We have made severe losses due to high operational and fuel costs," Sridharan added.

Jet Airways has ruled out a price reduction at the moment and so has India' flagship carrier, Air India.

State-run oil majors late Sunday night slashed aviation fuel by 16 per cent. This works out to a cut of Rs 11,784 per kilolitre for domestic airlines, while for international airlines, which are not subject to local sales tax, the cut would be Rs 8,200 per kilolitre.

In Delhi, which has the nation's second busiest airport, the price will fall from Rs 71,028.26 to Rs 59,244.26 per kilolitre.

The reduction in ATF price comes after two straight hikes in July and August this year, following which airlines revised their fares upwards of Rs.500 for short distances, and Rs 1,350 for long hauls.

This had a dampening effect on air travel, which saw a 30 per cent dip in traffic in the past two months.

Most airlines had raised airfare by over 18 per cent after the June 1 ATF price hike. But they did not cut fares when oil companies reduced fuel prices June 5 by over Rs 3,000 per kilolitre.