Agencies

New Delhi, Sep 1: State-run oil majors slashed aviation turbine fuel (ATF) prices by 16% from Sunday midnight, but airlines said they cannot guarantee a cut in airfares.

Oil marketers Indian Oil, Bharat Petroleum and Hindustan Petroleum revise ATF prices every month based on the international prices. This time round, the companies cut jet fuel prices by, an average, Rs 11,784 per kilolitre for domestic airlines. For international airlines, which are not subject to local sales tax, the cut would be $205 per kl. In Delhi, which has the nation’s second busiest airport, the price will fall from Rs 71,028.26 currently to Rs 59,244.26 per kl.

But airlines did not seem to be in a hurry to reduce tariffs. Jet Airways ruled out a price reduction. “For the time being, we don’t want to change our pricing strategy,” Wolfgang Prock-Schauer, chief executive officer, Jet Airways, said.

Agencies quoted a senior Air India official as saying, “Fuel prices have to be stabilised below $80 for us to consider any pass-on.”

Jitendra Bharghav, director (PR), Air India, told FE , “We welcome the news of ATF prices being reduced. It will help airlines cut their growing losses on account of high ATF prices. But we have not taken a decision on fare reduction at the moment.”

ATF accounts for 35% of an airline’s expenses.

The reduction in ATF price comes after two straight hikes in fuel prices in July and August this year, following which airlines had revised their fares upwards by Rs 500 for short distances, and Rs 1,350 for long hauls. This had a dampening effect on air travel, which saw a 30% dip in the past two months.

On the sidelines of a recent press conference, KG Vishwanath, senior general manager-MIS and investor relations at Jet Airways had told FE , “It’s very difficult to say that airfares will go down with the dip in crude oil prices. Each time crude prices go up, the impact is not fully passed on to the passenger. It’s a wait-and-watch situation.”