ATF price cut to reduce fares on only short routes

Low-cost carriers are planning to reduce air fares by Rs 100 to Rs 150 only on shorter routes as a result of the 4 per cent reduction in the cost of aviation turbine fuel (ATF) announced today. Full-service carriers like Jet Airways have ruled out such a possibility.

This is the fourth time oil companies have reduced prices of ATF this year, though they have raised prices eight times.

The largest increase (14 per cent) was in December and led to a Rs 300 rise in fuel surcharge that the passengers pay.

Said Samyukt Sridharan, chief commercial officer of SpiceJet, a low-cost carrier. "We still under-recover costs on longer routes, but margins on shorter routes will allow us to cut the fuel surcharge by up to Rs 150."

Echoed Air Deccan CEO Ramky Sundaram, "We have been looking at a decrease in fuel surcharge for a long time on shorter routes and this recent development will only be an addition to it." 
 

FUEL FARE
Months	ATF rates for  domestic flights (in Rs/kl)		ATF rates for  international flights (in $/kl)
	Delhi	Mumbai	Delhi	Mumbai
Jan-08	45,495.82	47,045.16	888.92	881.92
Dec-07	47,444.14	49,061.13	918.54	911.36
Nov-07	41,417.33	42,796.74	809.79	802.79
Oct-07	39,767.75	41,105.49	772.78	766.33
Sep-07	38,163.23	39,441.30	712.07	706.00
Aug-07	39,059.45	40,388.40	741.59	735.66
Jul-07	37,799.54	39,062.46	708.00	701.91
Jun-07	36,746.53	37,973.30	697.89	691.85
May-07	37,421.94	38,690.39	707.12	701.36
Apr-07	36,149.04	37,364.45	643.59	638.16
Mar-07	34,618.56	35,740.85	601.24	595.45
Feb-07	33,982.95	35,078.99	588.95	583.18
Jan-07	37,746.92	39,013.31	648.22	642.73
Source-Indian Oil Corporation                                                   CUTS

Go Air executives said they could announce a fare reduction on shorter routes.

However, Jet Airways has other plans.

"We anticipate that fuel prices will go up again. For instance, they went up steeply in December, so there is no question of passing on the reduction to passengers," said CEO Wolfgang Prock-Schaeur.

Aviation experts said the 4 per cent decrease does not have a major impact on airlines' operational costs, in which fuel accounts for 40 per cent.

"The impact of the decrease is too minimal to the cost of operations even though airlines might be leveraging it to reduce surcharge on shorter routes," said an analyst.