ATF prices slashed, but will airfares drop?

Oil companies have slashed Aviation Turbine Fuel (ATF) prices by Rs 2,221 per kilo litre with effect from midnight on Wednesday.

The state-run oil companies had raised jet fuel prices by over 6 per cent on July 1, the fourth hike in two months, after crude oil price at the global market hit a high of $72 per barrel.

Between May 1 and July 1, OMCs had raised ATF prices by nearly 22 per cent or Rs 6,943 a kl in Delhi [ Images ], and by over 22 per cent or Rs 7,259 a kl in Mumbai [ Images ].

Currently, ATF prices for Delhi and Mumbai are Rs 38,557.6 a kl and Rs 39,789 a kl, respectively.

All major carriers Jet Airways [ Get Quote ], Kingfisher Airlines [ Images ], Air India [ Images ] and Spicejet increased their fuel surcharge by Rs 400 following a hike in ATF prices.

The ATF price cut will be a big relief for airlines, but will airfares be cut? The rise in ATF prices, which constitute about 40 per cent of an airline's operating cost, have hit domestic carriers badly.