Fares fall with jet fuel prices

Carriers are likely to pass on the price reduction to the consumers immediately.

Domestic air fares are all set to drop with oil companies deciding to cut aviation turbine fuel (ATF) prices by about ten per cent.

Low-cost carrier SpiceJet said it would cut fares by about 2 per cent. "We want to pass on the benefit to passengers in order to continue the momentum in the market," said Ajai Singh, director, SpiceJet.

Air Deccan, too, said it would pass on the benefit though it did not specify the fare cuts.

Full-service carriers like Jet Airways and Air Sahara are expected to cut fares to meet the competition from the low-cost carriers.

Industry sources said these airlines were likely to take a call on the issue in the next couple of days.

According to Indian Airlines executives, the carrier will wait for a direction from the government before taking a decision.

Any movement in jet fuel prices has a sharp impact on airlines as it accounts for about 30 per cent of their operational cost.

Airline industry sources also said carriers like SpiceJet were in talks with oil companies to know their long-term pricing strategy.

"Air fares cannot be changed every month. Only last month fares went up as a result of a fuel price increase.

"We will want to know the long-term pricing strategy before deciding on the impact of the present drop on air fares," said an executive with a low-cost carrier.