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Mumbai, Sept 29: In what could bring cheer to the airline industry for the first time in eight months, aviation turbine fuel (ATF) prices are set to drop 6-7% (between Rs 2,500 and Rs 3,500 per kilolitre). Oil marketing companies are likely to announce the price cut on Saturday.
The move is in line with the recent fall in global crude oil prices. In the last eight months, ATF prices have climbed almost 27% to Rs 49,610 per kilolitre, severely denting the bottomline of airlines.
However, flying in the domestic skies may not get any cheaper. Despite the proposed reduction in ATF prices, airlines—both low cost carriers and full service carriers—don’t intend dropping fares as they hope to recoup the heavy losses suffered earlier.
No reduction is planned in fuel surcharge which is currently at Rs 750, airlines sources said. SpiceJet director Ajay Singh said, “We are not considering a reduction in fuel surcharge since we have been absorbing the jet fuel price hike for the last eight months.” Just last month, surcharge was raised Rs 100 to Rs 750.
According to Air Deccan chief operation officer Warwick Brady, “The rationale of not reducing the fuel surcharge despite a decline in the ATF price is justifiable. We have to be compensated for the loss made when ATF was rising and there was no surcharge levied to absorb the hike.”
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