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, airlinesboth low cost carriers and full service carriersdont 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.
Aviation turbine fuel prices to drop 6-7%
Civil aviation minister Praful Patel has assured that he would talk to the petroleum and finance ministries to reduce ATF taxes, which ranged from 8% to 24% across states. ATF taxes are the highest in the world in India, mainly due to high duties. ATF accounts for 47% of the operating cost of low cost carriers and 35% for full service carriers.