State oil marketing companies have cut jet fuel prices by over 7%, the second sharp reduction in consecutive month but there will be no immediate reduction in fares, airline executives have said. Domestic aviation turbine fuel price is down to Rs 62537 per kilolitre from Saturday, a drop of 7.3% from the October rate (Rs 67525). However with huge losses in last several months airlines are not expected to pass on the price reduction benefit immediately. Fuel costs accounts for 35-40 per cent of an airline\'s operating expenses and domestic airlines pay higher for fuel than regional peers because of state and central levies. Centre for Asia Pacific Aviation expects domestic airlines to post collective loss of about Rs 2200 crore in second quarter.
\"Fare reduction is unlikely as average fares are already very low. The aviation industry needs this kind of cost relief to get back to health. Reducing fares now would be unviable. We need to improve viability, not reduce it,\'\' said SpiceJet chief operating officer Sanjiv Kapoor. He added that the airline will keep offering limited period special offers to stimulate demand. Air India too ruled out immediate reduction in fares while Jet Airways is in wait and watch mode. IndiGo and AirAsia remain guarded about their plans. Travel industry too is not anticipating a fare cut now. \"The airlines lost money in second quarter and in October the indications are that most of them have seen occupancy a bit lower than September. For a month that had both Diwali and Dussera that is disappointing,\'\' said Samyukth Sridharan, chief operating officer of online portal Cleartrip.
Airline executives say carriers are already bleeding under heavy input cost and scope for reduction in airfares is limited. \"This reduction in fuel prices will provide some relief to airlines. If there is a further significant drop in fuel prices we can evaluate its effect on the fare structure,\'\' said Air India spokesperson. \"We always pass on benefits to passengers,\'\' said AirAsia India CEO Mittu Chandilya but did not disclose if the airline planned immediate fare cut. \"Our focus is to keep our fares consistently low and we do manage to do that,\'\' added IndiGo president Aditya Ghosh. While global crude oil prices fell 21% between June-September, the price of domestic aviation turbine fuel dropped 0.8% during this period. ATF prices were cut an additional 3%, effective October, bringing relief to airlines Domestic airlines expect the fall in prices of aviation fuel to boost their earnings from the quarter ending December. Report 01/11/2014