ATF rates cut by 5%; steepest reduction since 2010

In a major relief to cash-strapped airlines, jet fuel (ATF) prices were today reduced by a massive 5%, the steepest reduction in rates since February 2010.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by Rs 3,260 per kl, or 5%, to Rs 62,410 per kl with effect from midnight tonight, according to Indian Oil Corp, the nation's largest oil firm.

The fifth straight cut in jet fuel rates since mid-April, is the steepest reduction in price in 27 months. On February 1, 2010, ATF price was cut by 5.48% or Rs 2,260.05 per kl. Today's reduction is larger than that in absolute number
but as a percentage it is slightly lower than the February 2010 cut.

State-owned oil firms had on June 1 slashed rates by 2% (Rs 1,376.81 per kl) and Rs 753.8 per kl cut in prices in three previous fortnights.

After today's reduction, ATF price have come down to November 2011 levels after hitting a high of Rs 67,800.3 on April 1 this year. Jet fuel had hit an all-time high peak of Rs 71,028.26 per kl in August 2008 shortly after international oil rates touched a record USD 147 per barrel.

In Mumbai, jet fuel will cost Rs 63,178 per kl from tomorrow as against Rs 66,587.90 a kl now.

Jet fuel constitutes over 40% of an airline's operating cost and the reduction in prices will ease the burden of the cash-strapped airlines.

No immediate comment was available from the airlines on the impact of the price reduction on passenger fares.

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