NEW DELHI: In the biggest ever cut in jet fuel prices, state-run oil firms on Sunday slashed aviation turbine fuel (ATF) prices by over 16 per cent in step with softening international oil prices.
The cut of Rs 11,784 per kilolitre is the single biggest reduction in the fuel price.
The oil marketing companies have done their bit by passing on every penny of the reduction in prices of jet fuel in international market, an official of the Indian Oil Corp, the nation's largest oil firm, said.
Jet fuel prices in Delhi, which has the country's second busiest airport, have been cut by Rs 11,378.19 per kl to Rs 59,650.07 with effect from midnight tonight.
"We have always believed in passing on the benefit to consumers," the official said.
The cut in ATF prices would put pressure on airlines to reduce airfares. Most of the airlines had raised airfares after the June 1 hike by over 18 per cent, or Rs 10,839.16 per kl. But they did not cut fares when oil companies on June 5 cut fuel prices by over Rs 3,000 per kl. In subsequent two revisions, prices went up and have now been cut drastically.
ATF prices in Mumbai, the city with the nation's busiest airport, have been cut by Rs 11,838.75 per kl to Rs 61,834.81 per kl.
"The sharp fall in ATF price is on account of fall in prices of jet fuel in international market," the official said.
State retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum revise ATF prices once a month based on the average price of jet fuel in the international market.
Irrespective of clear indications of a likely fall in jet fuel prices from September 1, airlines across the board have announced a hike in airfares from next month.
Airlines in India pay the most for fuel when compared with other Asia Pacific hubs like Singapore, Hong Kong and Colombo, mainly on account of higher tax rates. Airlines in India pay an eight per cent excise duty, besides sales tax that varies from 20 per cent (in Delhi) to 35 per cent.
ATF accounts for 35 per cent of the total airline expenses.
