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Jet fuel prices down; no respite to passengers
Published on 16 May. 2011 11:45 PM IST
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Despite the state-owned Oil marketing companies (OMCs) cutting jet fuel price last week by 2.9% - after increasing it 14 successive times - passengers are unlikely to pay less for their travels, industry insiders said.
“It will not have any significant impact on the pricing as airlines’ are already giving attractive fares. Going below the current prices would be difficult,” Amber Dubey, director of areospace and defence for global consultancy firm KPMG, told IANS Monday.
According to other aviation experts, though the rate cut was a welcome move for the industry, a 2.9% cut in prices could be too little for the sector, which is already reeling under tremendous operating cost pressure.
Last week, the oil marketing firms cut jet fuel prices by 2.9% to `58,794 per kilo litre from `60,560 per kl, after they had raised the fuel prices 14 times successively adding `19,831.48 per kl since October last year, when ATF price in the national capital was `40,728.52.
Even the national carrier Air India, which is giving promotional fares with a discount of 50 percent from last years’ fares, said that it would be difficult for the industry to cut fares further as fuel and other operating costs have gone up.
“It is good for us on the operations side as it will help our margins to improve, but I do not think that it would have any major impact. Other costs have also gone up,” a senior official with Air India’s operational arm, told IANS.
According to the official, fuel cost accounts for 40 percent of airlines’ operating cost, which may vary between domestic flights which have to pay for surges, while international flights get exemption from duty on the fuel.
“It’s a very big component of our operating cost, especially in the domestic sector,” he said.
Oil marketing firms like Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

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