Public sector oil marketing companies on Sunday announced the biggest ever cut of as much as 16 per cent in the prices of aviation turbine fuel.
However, domestic carriers said they are not looking at a decrease in airfares. The cut of Rs 11,784 per kilolitre will come into effect from September 1.
"Our prices for now would remain unchanged. Since ATF prices have been on the rise for the past several months, we would like to look at the price movement for a few months before looking at a decrease in prices," said Wolfgang Prock-Schauer, CEO of Jet Airways.
He, however, did not rule out an increase in airfares in the coming months. Experts said while monthly savings for low-cost carriers due to this decrease would be around $4 million, savings for full service carriers could be around $10 million.
They also said that the industry would be able to curtail 30 per cent of its monthly losses. Indian carriers are expected to make a cumulative loss of $2 billion in 2008-09.
"Airline pricing had gone pretty haywire in the lean season which is why they made more losses than they should have. Even if the decrease in ATF prices mean a huge relief, they would want to reap the benefits of the upcoming peak season by going for an increase in fares," said an industry expert. Executives of low-cost carrier
SpiceJet also said that they would not go for a decrease in prices.
"Our prices do not change. We have been saying that we are not planning any increase," said Samyukth Sridharan, chief commercial officer, SpiceJet.
Most of the airlines had raised fares after the government on June 1 hiked the prices of jet fuel by over 18 per cent, or Rs 10,839.16 per kilolitre. But they did not cut fares when oil companies on June 5 slashed fuel prices by over Rs 3,000 per kilolitre.
"The oil marketing companies have done their bit by passing on every penny of the reduction in prices of jet fuel in international market," said an official with the Indian Oil Corporation, the country's largest marketer of oil products.