Even when the oil companies have reduced the price of the aviation turbine fuel (ATF) by almost 16% mainly due to fall in international ATF prices, it seems domestic air travel is not willing to reduce their fares. Other than now, the prices of ATF fell in the month of February this year.

An important announcement by Indian Oil was made on Sunday that where earlier domestic airlines were paying Rs 71.02 a litre for ATF, now from September they will have to pay Rs 59.65 litre only. Airlines in Chennai too will pay Rs 65.49, down from Rs 77.66 a litre. In Mumbai, where airlines were spending Rs 73.67 per litre, now will spend only Rs 61.83 a litre.

40-50 % of operating costs of most domestic airlines is accounted by ATF. Due to the rise in the price of the crude oil, the industry increased either fuel surcharge costs or basic fares.

While in their defense regarding immediate decrease in airfares, the airline officials clarified that ATF costs have increased by about 90% between October 2005 and July this year. While on the other hand, there have only been an increase of 27% in the fares of full service airlines on the Delhi-Chennai sector, and an increase of 1% in the Delhi-Kolkata sector.

Mr Wolfgang Prock-Schauer, Chief Executive Officer, Jet Airways, reported, “For the time being, we do not want to change our pricing strategy. We want to see medium term development of ATF prices before taking a call. Even with this decrease, oil prices are significantly above the levels as compared to about six months ago.”

Due to the recent hike in the prices of ATF, the airlines had to suffer a great loss. As reported by SpiceJet, it alone had a loss of Rs 102 crore during the Q1 of the present year, due to an increase in fuel costs by 132%.