Airlines are in no mood to hike air fares immediately after state-run oil companies on Monday increased jet fuel prices by over 12% on firming international oil prices. The rise in ATF prices, which constitute 40% of airlines? operating cost, may further put pressure on cash-strapped domestic carriers.
State-run oil companies Indian Oil, Bharat Petroleum and Hindustan Petroleum raised aviation turbine fuel price by Rs 3,949 to Rs 36,252 per kilolitre effective from Monday midnight. In Mumbai, home to the nation?s busiest airport, the price of the fuel will go up from Rs 33,260.8 per kilolitre to Rs 37,367 per kilolitre.
A spokesperson from Kingfisher Airlines said, ?We are examining the impact of hike in ATF prices and will take a decision on it shortly.? The country?s oldest private carrier Jet Airways too is not hiking fares soon. The carrier, which posted a net loss of Rs 961 crore for FY09, is in a cost cutting mode, has attractive fare structure on Jet Konnect, its newly launched service with fares lower by 15% than Jet Airways.
Similarly, other airlines like Delhi-based SpiceJet is analysing the situation but has not announced an immediate hike in fares. In fact, the carrier had announced reduced fares at Rs 1,600 and above on its key sectors if a flier books ticket online between June 10 and 12 for travel between July 1 and September 15, 2009. The offer was valid for travel on all the 18 destinations on SpiceJet?s network.
International crude oil prices have firmed to a seven-month high of $72 per barrel on hopes of demand revival in US. The rise in ATF prices, which constitute 40% of airlines? operating cost, may further put pressure on cash-strapped domestic carriers. ATF prices had peaked to Rs 71,028.26 per kl (in Delhi) in August last year on international crude prices touching a historic high of $147 a barrel. But subsequently the rates had come down, slashed every month till October and twice a month from November.
