The recent two per cent cut in jet fuel prices will have little impact on airline companies or passenger fares, analysts say. “The aviation sector is reeling under losses. And in such a scenario, it will be difficult to bring down fares. Airlines will use any dip in fuel price to consolidate their profits,” an official of an airline company said.
Aviation analysts feel that the difference would be minimal, according to a report by The Hindu Business Line. “Since international oil prices seem to be stabilising on the higher side, a two per cent reduction on the jet fuel prices will hardly make any difference,” said Amrit Pandurangi, Senior Director at Deloitte Touche Tohmatsu Pvt Ltd. The extremely competitive nature of the aviation industry will make it difficult to bring down air fares, he added. “It is industry behaviour that determines the profit or loss of an airline company. If one airline reduces air fares, others have to follow suit. The benefit from the jet fuel cost reduction is minimal,” Pandurangi said. Even after the reduction, aviation turbine fuel (ATF) prices are still considerably higher than a few months earlier. In Mumbai, jet fuel will now cost Rs 66,587.90 per kilo litre (kl). The three fuel retailers, Indian Oil, Hindustan Petroleum and Bharat Petroleum, revise jet fuel prices twice every month based on the average international price in the preceding fortnight.
Click here to see the original article>Aviation analysts feel that the difference would be minimal, according to a report by The Hindu Business Line. “Since international oil prices seem to be stabilising on the higher side, a two per cent reduction on the jet fuel prices will hardly make any difference,” said Amrit Pandurangi, Senior Director at Deloitte Touche Tohmatsu Pvt Ltd. The extremely competitive nature of the aviation industry will make it difficult to bring down air fares, he added. “It is industry behaviour that determines the profit or loss of an airline company. If one airline reduces air fares, others have to follow suit. The benefit from the jet fuel cost reduction is minimal,” Pandurangi said. Even after the reduction, aviation turbine fuel (ATF) prices are still considerably higher than a few months earlier. In Mumbai, jet fuel will now cost Rs 66,587.90 per kilo litre (kl). The three fuel retailers, Indian Oil, Hindustan Petroleum and Bharat Petroleum, revise jet fuel prices twice every month based on the average international price in the preceding fortnight.