Business Today

Jet fuel price cut by 11.3 per cent, now costs less than diesel

Jet fuel constitutes over 40 per cent of an airline's operating costs and the price cut will ease the financial burden of cash-strapped carriers.

twitter-logoPTI | February 2, 2015 | Updated 09:50 IST
Jet fuel price cut by 11.3%, now costs less than diesel
Picture for representation purpose only. (Source: Reuters)

Jet fuel (ATF) price was on Sunday cut by a steep 11.3 per cent and now costs less than diesel.

Last month, its rate had fallen below the price at which petrol is sold.

While petrol and diesel prices have so far not been changed as per the fortnightly revision, non-subsidised domestic cooking gas (LPG) was cut by Rs 103.5 per cylinder to Rs 605 a cylinder after international oil prices slumped to near six-year lows.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 5,909.9 per kilolitre, or 11.27 per cent, to Rs 46,513.02 per kl, oil companies announced on Sunday.

The reduction, which followed possibly the steepest ever cut of Rs 7,520.52 per kl or 12.5 per cent effected from January 1, has led to ATF becoming cheaper than even diesel.

Last month's reduction saw the ATF price slip to Rs 52.42 a litre, below Rs 58.91 a litre cost of petrol in Delhi. And after on Sunday's cut it costs Rs 46.51 per litre and is cheaper than diesel that sells at Rs 51.52 per litre.

ATF has a higher octane than petrol and diesel is a heavier fraction in the distillation process. Traditionally, auto fuels being of lesser quality than ATF, would cost less.

But four consecutive excise duty hikes since November - totaling Rs 7.75 a litre on petrol and Rs 7.50 on diesel, have reversed this.

But for these, the cumulative reduction of Rs 14.69 per litre in petrol price in nine cuts since August and Rs 10.71 a litre on diesel since its deregulation in October, would have been higher.

ATF attracts an excise duty of 8 per cent.

The cut, effective since Sunday, is the seventh reduction in jet fuel rates since August.

Jet fuel constitutes over 40 per cent of an airline's operating costs and the price cut will ease the financial burden of cash-strapped carriers.

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

Following the global trend, the price of 14.2 kg non-subsidised LPG cylinder has been cut to Rs 605 from Rs 708.50 previously in Delhi.

This is the seventh straight reduction in rates of non-subsidised or market-priced LPG, which the customers buy after exhausting their quota of 12 cylinders at subsidised rates, since August.

A subsidised LPG refill currently costs Rs 417 in Delhi.

Price of non-subsidised LPG were last cut on January 1 by Rs 43.50.

In seven monthly reductions, non-domestic LPG rates have been slashed by Rs 317.50 per cylinder, bringing the price to a three-year low.

State-owned fuel retailers, Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) revise jet fuel and non-subsidised LPG prices on 1st of every month based on average imported cost and rupee-USD exchange rate.

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