Aviation turbine fuel slashed by 4%

For the second fortnight in a row, state-owned oil companies today cut jet fuel prices by about 4% after international oil rates cooled off from a two-year high.

Oil companies reduced aviation turbine fuel (ATF) price by Rs2,327.89 per kilolitre or 3.95%, to Rs56466.11 per kilolitre in Delhi with effect from midnight tonight, an official of Indian Oil Corporation, the nation's largest fuel retailer, said.

Jet fuel rates had for the first time in eight months been cut on May 16 when prices were reduced by 2.9%. In two reductions, ATF price have come down by Rs4094 per kilolitre this month.

The official said the basket of crude oil India buys has averaged less than $110 per barrel in the second fortnight of May which was taken into account for calculating the desired selling price of ATF from June 1. The average of Indian basket of crude oil was over $114 per barrel in the first fortnight and $118 per barrel in April.

ATF price in Mumbai, home to nation's busiest airport, were slashed to Rs57166.96 per kilolitre from Rs59602 per kilolitre.

The reductions this month have come after 14 successive hikes since October, 2010, when international crude oil prices started soaring.

The ATF price in Delhi on October 1, 2010 was Rs40,728.52 per kilolitre. The rates were increased by Rs19,831.48 per kilolitre, or 48.7% till April 30, when last price hike was announced.

No comment could be immediately obtained from airline companies on the impact of the price reduction on passenger fares.

Fuel cost accounts for 40% of the airlines' operating cost and rates vary from airport to airport depending upon the local sales tax.

IOC and its sister public sector retailers Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.