No change in India domestic air fare despite fuel price cut

Domestic air fares will not come down just yet despite the oil companies reducing the price of aviation turbine fuel (ATF). On Friday, the state-owned oil major, Indian Oil, announced a reduction of between Rs 896 and Rs 978 per kilolitre of ATF being sold to domestic airlines in September.

The reduction has, however, not enthused the airline industry to lower either their fares or the fuel surcharge. The Chief Executive Officer, SpiceJet, Mr. Siddhanta Sharma, said that the airline had no immediate plans to decrease fares.

The President and Chief Executive Officer, IndiGo Airlines, Mr. Bruce Ashby, pointed out that it might not be possible to immediately pass on the benefit of lowered ATF prices to the passengers as in the past 12 months fuel prices had tended to go up more often than they had come down.

City rates

In Delhi, ATF prices have been constantly over Rs 34,000 per kilolitre for eight months of the current year. The only exception being February this year, when it was sold at Rs 33,982.95 per kilolitre.

In Chennai, the average price per kilolitre of ATF has been above Rs 37,000 during the year, touching a high of Rs 42,572.67 in August.

ATF accounts for 30-35 per cent of the operating costs of domestic airlines. Most domestic airlines indicated that they had not taken a decision on decreasing fares just yet.

Surcharge

To offset the rising ATF prices, airlines increased the fuel surcharge twice this year alone. At present the state-owned Indian imposes a surcharge of Rs 1,100 while most other airlines charges are higher.