Jet fuel or ATF (aviation turbine fuel) prices were today cut by a steep 4.5 per cent, the first reduction in rates in six months. Though, airlines may not immediately reduce fares, it will definitely help bring down the fuel cost of cash-strapped carriers which may be passed on to the passengers.
No immediate comments were available from the airlines on the impact of the price reduction on passenger fares. Jet fuel constitutes over 40 per cent of an airline's operating costs
ATF prices had touched a life time high of Rs 77,089.42 per kilolitre (kl) following five consecutive increases since June as the rupee depreciated against the US dollar, making oil imports costlier.
But, the rupee's recovery in the last one month helped trim import cost, leading to the cut in prices.
The rupee appreciation against US dollar also led to two rounds of reduction in petrol rates in one month - Rs 3.05 a litre from October 1 and Rs 1.15 announced today.
Since June, ATF prices have gone up by a record Rs 14,439.45 or 23 per cent in five instalments.
In Mumbai, jet fuel will cost Rs 76,035.89 per kl from tomorrow as against Rs 79,716.05 per kl currently.
Rates at different airports vary because of the difference in local sales tax or VAT.
The three fuel retailers -- IOC, Hindustan Petroleum and Bharat Petroleum -- revise jet fuel prices on the 1st of every month, based on the average international price in the preceding month.