Business Desk – Jet Fuel Price Cut: In the beginning of July, there has been a relief news for the people associated with airlines and hotel-restaurant business. Government oil marketing companies (OMCs) have reduced the price of Aviation Turbine Fuel (ATF) i.e. jet fuel by about Rs 5 per liter from July 1.
The new rates have come into effect across the country from Wednesday. Along with this, the price of 19 kg commercial LPG cylinder has also been reduced by Rs 183.50. However, there has been no change in the prices of 14.2 kg domestic LPG cylinder.
After the implementation of the new prices, the price of ATF in the capital Delhi has come down to around Rs 110 per liter. The direct impact of the decline in crude oil prices in the international market has been seen on the Indian market as well. In the last few months, the operating costs of airlines had increased due to rising prices of jet fuel, but now they are expected to get relief from this reduction.
Aviation turbine fuel forms the largest portion of the total operating cost of any airline. In such a situation, due to reduction in ATF prices, fuel expenses of airlines will reduce and their costs will reduce. However, its actual benefit will also depend on the fuel procurement and hedging strategy of each airline.
Experts believe that reducing fuel costs can strengthen the financial position of airlines. However, whether this will lead to an immediate reduction in air fares for passengers or not will entirely depend on the business decisions of the airlines.
ATF prices in India are reviewed on the 1st of every month. For this, along with the average prices of crude oil and aviation fuel in the international market, the exchange rate of rupee-dollar is also made the basis. On the basis of these factors, oil companies decide new prices.
In recent times, fuel has become cheaper due to reduction in geopolitical tension in West Asia, better supply of crude oil and softening of crude oil prices in the international market. The benefits of this are now being seen in the Indian market also. Market experts say that if global crude oil prices remain under control and the supply remains normal, then there may be a possibility of further relief in fuel prices in the coming months.
Operating costs of airlines will reduce as ATF becomes cheaper by Rs 5 per litre.
Hotel and restaurant business will get relief as commercial LPG cylinder becomes cheaper by Rs 183.50.
At present there is no relief for domestic LPG cylinder consumers.
If global crude oil prices continue to soften, there may be a possibility of further reduction in fuel prices.
