Responding to the government’s decision to exempt jet fuel from Customs duty three days ago, state-owned refiners have reduced the prices of the fuel by 4.5 per cent. The airlines, however, remained non-committal on slashing fares.
The oil-marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — had cut jet fuel prices by over 16 per cent on November 1 after international prices fell in October. The government had also reduced the Customs duty on the fuel to zero from 5 per cent.
“We have passed on the zero Customs duty benefit to the consumers,” said a senior official with IOC, which supplies over half the jet fuel the country’s airlines consume.
After the latest price cut, which comes into effect from this midnight, the oil companies have reduced jet fuel prices by around 37 per cent since August this year. The companies would revise the prices again on November 15 in line with international prices.
Jet fuel prices had risen nearly 88 per cent between July 2007 and July 2008.
The airlines, meanwhile, have claimed they are still incurring losses. As jet fuel prices rose till July this year, the airlines had raised fares to meet their increased costs. This resulted in lower seat occupancy, which in turn hit their income.
The airlines have been seeking help from the government to keep themselves out of the financial crisis, with unpaid fuel bills running up to over Rs 2,000 crore. The government-owned oil refiners have agreed to allow the airlines clear their dues in six monthly installments till March 2009 and give them 90 days credit instead of the earlier 60 days. These measures, coupled with lower oil prices, are expected to minimise the losses of the airlines