ATF price cut not to lower airfare
Domestic airfares will not become cheaper in the near future even though the price of aviation turbine fuel (ATF) has come down by Rs 5585.91 a kilolitre, or 12 per cent.delhi Updated: Nov 16, 2008 01:28 IST
Domestic airfares will not become cheaper in the near future even though the price of aviation turbine fuel (ATF) has come down by Rs 5585.91 a kilolitre, or 12 per cent. The prices could fall further as Dubai ATF prices have come down by around $22–23 (Rs 1,100-1,150) per barrel.
Airlines feel they need some more time before revising the fare structure, as they are still reeling under huge losses due to high ATF prices.
“Reduction in fuel prices is a welcome step. But we still have to work out the economics before any decision on fares can be taken. We should not lose sight of the fact that airlines had accumulated huge losses when ATF prices were at an all-time high,” Jitendra Bhargava, executive director, corporate communications, of the state-owned Air India, said.
ATF prices touched an all-time high of Rs 71,028.76 per kilolitre in Delhi in August because of the sharp increase in global crude prices.
Bhargava pointed out that with the dollar appreciating against the rupee, the dollar-denominated costs for the airlines have also gone up. Dollar-denominated costs include leasing and pre-delivery payments for acquiring an aircraft.
However, a senior analyst with consultancy firm KPMG told HT: “We have to address those issues that would help bring down the fares. The airlines should look at other areas where they can cut costs.”
According to the analyst, an airline’s profitability is not solely dependent on fuel prices. There are other areas that need to be looked into to make the operations more profitable.