Oil companies cut jet fuel prices by 2%

In the second major relief to cash-strapped airlines this month, jet fuel (ATF) prices were on Saturday cut by about 2%.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by Rs. 1,241 per kilolitre (kl), or 2%, to Rs. 61,169 per kl with effect from Sunday, according to Indian Oil Corp, the nation's largest oil firm.

The reduction comes on back of a massive 5% (Rs 3,260 per kl) cut in rates effected from June 16.

This is the sixth straight cut in jet fuel rates since mid-April. 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 the three previous fortnights.

After today's reduction, ATF prices have come down to October 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. 61,934 per kl from tomorrow as against Rs. 63,178 per kl now.

Jet fuel constitutes over 40% of an airline's operating costs and the reduction in prices will ease the burden of 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.