The cut is the steepest since May last year, an executive said. The prices were dropped after Brent crude slid to a year low of $94.24 on Tuesday.
ET Bureau
NEW DELHI | MUMBAI: Indian carriers will save about Rs 800 crore this year via the 4% reduction in ATF (aviation turbine fuel) prices implemented by oil refiners early on Wednesday, according to airline executives and analysts.
This will, however, lead airlines, already offering steep discounts on air fares, to slash prices further, the executives said. The cut is the steepest since May last year, an executive at Bharat Petroleum told ET. The prices were dropped after Brent crude slid to a year low of $94.24 on Tuesday.
Jet fuel accounts for the highest chunk of a local carrier’s operating costs in India. High levels of state taxes further add to the fuel costs. Chief executives of local carriers recently met India’s aviation minister to demand that ATF should be brought under the declared goods category which would bring it under the tax bracket of a uniform 4%.
The price cuts, however, will not lead to any difference in air fares.
“Air fares have not been directly linked to ATF prices for the last 12-16 months. Also, we have clubbed fuel surcharges with the base fare since early this year. So, there’s no case for cutting prices,” said a senior executive at low-fare carrier SpiceJet, which has been taking the lead in offering discounts in India.
Oil refiners last year sold a total of 2,836 thousand metric tonnes of jet fuel worth .
Rs 18,674 crore to domestic carriers last year and 1,959 TMTs worth .
Rs 14,076 crore to international carriers, said the official at BPCL. A total of 495 TMT worth .
ET Bureau
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