ATF prices descend, but airfares maintain altitude

ATF prices descend, but airfares maintain altitude

ATF prices descend, but airfares maintain altitude

 A steep 11.7 per cent decrease in the price of jet fuel have raised the hopes of fliers of a further slump in airfares, but airlines are non-committal.

Airlines refused to comment on the decline in aviation turbine fuel (ATF) prices, or whether they would contemplate slashing fares against the backdrop of jet fuel prices, decreasing from Rs 46,407.36 per kilolitre (in Delhi) in August, to Rs 40,938.24, this month.

However, the prices vary across the country due to the sales tax component stipulated by various states. In Kolkata, ATF would cost Rs 49,318.92 per kilolitre, Chennai Rs 45,448.32, and Mumbai Rs 41,846.75. If one compares the September price with that of July, there is a decrease of 12,415.68 per kilolitre in 90 days in Delhi. In Chennai, the decrease during this period is Rs 13,725, Mumbai Rs 12,880.74, and in Kolkata it is Rs 13,609.45.

The question that fliers are asking is whether airlines are prepared to pass on the benefits they were getting to the customers. The spending on jet fuel is about 40-50 per cent of the total expenses incurred by an airline. A fall in ATF prices thus helps reduce expenses.

Aviation sector sources point out that airlines may not pass on the whole benefit to fliers, but would be forced if one of them starts a discount sale.

Dollar turns pricey

One reason that could hold back airlines from passing on the benefits is the weakening of the rupee against the dollar. Most of the transactions that airlines do are in dollars and they will have to shell out more rupees in this regard.

In addition, sources point out that the airfares are lower by around 25 per cent, compared with last year. A Delhi-Mumbai ticket for Wednesday could be bought for as low as Rs 3,350 while one for September 30, was available for only Rs 2,750. One can travel to Bengaluru from Delhi for Rs 4,640 for a booking on Tuesday evening.

Another section points out that this may be the case for busy metro routes, but it does not work in this way in other routes like Delhi-Kochi. For a Wednesday ticket booked about 12 hours before the journey, one has to shell out Rs 7,158 in Air India. Interestingly, on low-cost carriers IndiGo and SpiceJet, it is much higher at Rs 8,955 and 8,256, respectively.

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