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Air fares unlikely to witness any decline

Air fares unlikely to witness any decline
PTI
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First Published: Wed, Jun 01 2011. 04 53 PM IST
Updated: Wed, Jun 01 2011. 04 53 PM IST
New Delhi: With major airlines suffering huge losses, air fares are unlikely to witness any decline despite oil companies cutting jet fuel prices for the second time in a month.
Officials of major carriers said that despite the reduction in the prices of aviation turbine fuel (ATF), the jet fuel rate remained almost 50% higher than the same time last year.
The ATF prices have risen from May 2010 till April this year by over 55%, they pointed out.
As some of the airlines were facing a near bankruptcy situation with very high accumulated losses, the industry was not in a position to pass on any benefit of ATF rate reduction to customers at this stage, they said.
The officials, all requesting anonymity, said the airlines were already offering various promotional schemes and packages to attract fliers during the peak summer season.
“None of us are in a position at this moment to lower fares any further,” one official said categorically.
Oil companies have put carriers like Air India and Kingfisher on a cash-and-carry basis to pay upfront for their daily ATF consumption.
Fuel cost accounts for 40% of the airlines’ operating costs and the ATF rates vary from airport to airport ranging from 4 to over 30% depending upon the state-level sales tax rates.
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First Published: Wed, Jun 01 2011. 04 53 PM IST