The share prices of three listed airline companies – Jet Airways, SpiceJet and Kingfisher Airlines – witnessed a sharp spurt as state-owned oil companies cut aviation turbine fuel (ATF) prices by 17% on Friday (31 October 2008), taking the total fall in the past three months to a whopping 38% from the August 2008 high. Jet Airways (15.76% at Rs 181.05), SpiceJet (up 13.72% at Rs 12.85) and Kingfisher Airlines (up 4.19% at Rs 33.60), spurted.
Moreover, the government on Friday also abolished customs duty of 5% on ATF, which will lead to a further lowering of price on 15 November 2008.
Currently, ATF accounts for 45% - 50% of an airline’s costs. The two steps together will help them pare their overall costs by 9% - 10%, and bridge almost two-thirds of the 15% gap between revenue and costs.
The new ATF prices will come into effect from 1 November 2008. According to reports, the next revision in ATF prices will happen on 15 November 2008.
The cut in ATF prices is the latest in a string of benefits that the cash-strapped oil companies have given to the airlines. Recently, they announced benefits on the Rs 2,500-crore dues that the airlines owe them, including interest-free repayment of the dues in six monthly installments till 31 March 2009.
Moreover, the government on Friday also abolished customs duty of 5% on ATF, which will lead to a further lowering of price on 15 November 2008.
Currently, ATF accounts for 45% - 50% of an airline’s costs. The two steps together will help them pare their overall costs by 9% - 10%, and bridge almost two-thirds of the 15% gap between revenue and costs.
The new ATF prices will come into effect from 1 November 2008. According to reports, the next revision in ATF prices will happen on 15 November 2008.
The cut in ATF prices is the latest in a string of benefits that the cash-strapped oil companies have given to the airlines. Recently, they announced benefits on the Rs 2,500-crore dues that the airlines owe them, including interest-free repayment of the dues in six monthly installments till 31 March 2009.
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