Air fares to stay high despite dip in ATF

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New Delhi, Oct 1: The prices of aviation turbine fuel (ATF) in the country have fallen by around 20%, from its highest ever mark in August. The drop, however, will not translate into lower fares from the various domestic air carriers at present.

After touching a record Rs 71,028.26 a kilolitre in Delhi in the month of August, state-run oil marketing companies reduced prices for the month of September by nearly one-fifth to Rs 59,650.07 and for October, airlines will be able to buy fuel in Delhi cheaper by another 5.36% at Rs56,447.80 a kilolitre. The country’s oil marketing companies have reduced the cost of ATF for the month of October by around 5% from its September levels after crude fell to around $96 a barrel in mid September.

The cut in ATF prices is by Rs 3,202.27 per kilolitre to Rs 56,447.80 per kilolitre for

Delhi. The airlines are estimated to rack up almost $2 billion in cumulative losses this financial year, according to analyst, forcing the airlines to look into increasing fares, for the festive season starting October, to make up for the huge losses that arose from the high ATF price over the last couple of months.

According to IATA chief, Giovanni Bisigiani, the Indian aviation industry’s losses are estimated to be second only to the American aviation industry, which is the largest and most developed in the world. But most carriers are most probably going to keep the fares at the same levels for a few months before thinking of reducing. Major airlines say that the decrease is too small for them to lower surcharges or fares. “Even with this slight decrease in ATF prices for October, the prices remain around 50% higher as compared to one year ago,” Wolfgang Prock-Schauer, CEO, Jet Airways said.

Other carriers like Air India, Kingfisher and Indigo are still evaluating the decrease but doubt that fares for October will change. ATF has been rising at a shocking rate since May this year and most of the airlines have been forced to absorb most part of the hike. Air India has seen an almost 63% jump in its fuel bill due to this rise, Raghu Menon, CMD of Air India told Fe earlier this month. In Mumbai, ATF prices fell by 5.42% to Rs 58,479.37 a kilolitre for October, compared with Rs 61,834.81 in September.