SpiceJet to lower fares only if fuel prices settle

September 1st, 2008 - 6:10 pm ICT by IANS  

New Delhi, Sep 1 (IANS) Low-cost carrier SpiceJet will reduce fares only if aviation fuel prices remain stable over the next two-three months, a top airline official said Monday.”At this point of time, we are not reducing fares. But if the ATF (aviation turbine fuel) prices remain stable for the next two-three months we would definitely do so,” SpiceJet’s chief commercial officer Samyukta Sridharan told IANS.

As aviation fuel accounts for 35 percent of an airline’s expenses, a hike in its price automatically pushes up operational costs of a carrier, leading to airfare hikes. Fares of airlines across the board have jumped over the last few months.

“There has been an increase of 47 percent in the ATF prices between March and June this year,” Sridharan said.

He said the ATF prices have been generally volatile, and that it was prudent to wait and watch before passing on price reduction benefits to customers. “We have made severe losses due to high operational and fuel costs,” Sridharan added.

Jet Airways has ruled out a price reduction at the moment and so has India’ flagship carrier, Air India.

State-run oil majors late Sunday night slashed aviation fuel by 16 percent. This works out to a cut of Rs.11,784 per kilolitre for domestic airlines, while for international airlines, which are not subject to local sales tax, the cut would be Rs.8,200 per kilolitre.

In Delhi, which has the nation’s second busiest airport, the price will fall from Rs.71,028.26 to Rs 59,244.26 per kilolitre.

The reduction in ATF price comes after two straight hikes in July and August this year, following which airlines revised their fares upwards of Rs.500 for short distances, and Rs.1,350 for long hauls.

This had a dampening effect on air travel, which saw a 30 percent dip in traffic in the past two months.

Most airlines had raised airfare by over 18 percent after the June 1 ATF price hike. But they did not cut fares when oil companies reduced fuel prices June 5 by over Rs.3,000 per kilolitre.

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