In order to support the local airline firms the government scrapped basic customs duty of 5% on the fuel on Friday.  

Following suit, the Oil Companies reduced jet fuel prices by Rs 2,100 per kilolitre. Ever since October, the oil companies have reduced jet fuel prices by over 16 percent in response to the fall in international prices. The price cut will be effective from midnight of 3 November. The fuel will now sell at Rs 44,965.70 a kilolitre in Delhi and Rs 46, 518.85 a kilolitre in Mumbai.

The airlines had continued to incur losses as the jet fuel prices had risen nearly 88 percent between July 2007 and July 2008. As a result, fares were raised, but then the seat occupancy reduced whereby the profits started falling.

The airline companies are facing a financial crisis with unpaid bills running over Rs 2,000 crore. The government-owned oil refiners have agreed to allow the airlines to clear their dues in six monthly installments till March 2009, and give them 90 days credit instead of the earlier 60 days. These measures, coupled with lower oil prices, are expected to minimize the losses of the airlines.

However, the oil companies will revise the prices again on November 15 in line with international prices.

Regarding any reduction in fares, the Chief Commercial Officer of Spice Jet Ltd, Samyukth Sridharan said that Monday's decision by oil firms was not likely to lead to a fare cut.

But, he said, "we are exploring options to...maybe stimulate advance bookings or look at other discounts."