Now, jet fuel to be traded in futures market

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Friday , May 02, 2008 at 1456 hrs Aviation turbine fuel, prices of which has skyrocketed in the recent past, may soon find its way to futures market with the country's leading commodity bourse MCX planning to launch a contract for trading in ATF.

The futures trading of ATF, for which MCX has received approval from the commodity market regulator Forward Markets Commission (FMC), is likely to offer air carriers a domestic platform to hedge against the spiralling fuel prices.

However, trading in its futures contract may take some time to start, as MCX would launch it only after studying the current environment, sources close to the development said. When contacted, Multi Commodity Exchange Managing Director Joseph Massey told PTI that the exchange has not yet decided on when the contract would be launched.

Experts in aviation industry believe that futures trading of ATF would help set a benchmark for the fuel's prices, which at present is arrived at after negotiations between airlines and oil marketing companies.

PSU oil firms recently raised ATF prices by over 9 per cent in line with the rise in international crude oil rates. In Mumbai, the price has been hiked by Rs 5,276 per kl to 60,467.58 per kl effective from April 30 midnight. Following this, airlines have also decided to hike fuel surcharge.

Jet Airways and SpiceJet would increase the surcharge by Rs 150 on short-haul routes and Rs 350 on long-haul routes, sources in the airlines said.

While Jet would make the hike effective from May 3, SpiceJet has already done it.

Jet Airways is also likely to increase the basic fare of economy and business class tickets by about 10 per cent from May 3. Others airlines, too, are contemplating to follow suit.