ATF prices slashed. Will airfare become cheaper?

State-owned oil companies on Tuesday slashed jet fuel prices by over 3 per cent as an appreciating rupee made imports cheaper.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 1,974 per kilolitre (kl), or 3.02 per cent, to Rs 62,908 per kl with effect from midnight tonight, an official of the nation's largest fuel retailer Indian Oil Corporation said.

The reduction comes in the wake of a steep Rs 1,805.44 per kl, or 2.9 per cent, hike in jet fuel rates to Rs 64,882.11 per kl from January 16.

The official said the reduction was possible as the rupee has appreciated to about Rs 49.50 per US dollar from over Rs 52 to a dollar at the time of the last hike.

Prior to the last hike, IOC and sister public sector fuel retailers Hindustan Petroleum and Bharat Petroleum had reduced ATF prices twice -- by 1.3 per cent on December 16 and by about 1 per cent from January 1.

In Mumbai, ATF will cost Rs 63,864 per kl from tomorrow, as against the current rate of Rs 65,920.87 per kl.

Jet fuel constitutes about 40 per cent of an airlines' operating cost and the reduction in prices will slightly ease the burden on cash-strapped airlines. No immediate comment was available from airlines on the impact of the price reduction on passenger fares.

The three fuel retailers revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.