‘Domestic Airlines Can Save USD 400mn Due to Fuel Prices Drop’

Published: 21st January 2015 11:31 PM  |   Last Updated: 21st January 2015 11:31 PM   |  A+A-


NEW DELHI: Domestic airlines are expected to save USD 400 million in the current fiscal on account of sharp decline in fuel prices, which could also mark a turnaround for the loss-making aviation sector, a report said today.      "Between September last year and January this year, into- wing air turbine fuel (ATF) prices in India declined by 24 per cent. India's airlines could save USD 400 million this year on lower fuel prices," Sydney based aviation think tank Centre for Asia Pacific Aviation (CAPA) said.     

With fuel accounting for around half of the operating costs of an airline in the country, the 24 per cent fall represents a 12 per cent reduction in costs, the report said.        

The sharp decline in fuel prices is a major source of relief in a market where ATF is about 50 per cent higher than the countries like Dubai or Singapore due to higher government taxes, it said.       

CAPA also expects a further fall in the prices by the month end, as the oil marketing firms have yet to pass on the full extent of the decline in global fuel prices.      Noting that the country's beleaguered aviation industry is starting to see signs that could possibly mark the beginning of a structural turnaround in its fortunes, the report said that the decline in oil prices is perhaps the greatest single reason for the improved sentiment in the industry.       The reduction in the cost of fuel due to a combination of declining base prices, higher discounts and lower tax is very welcome, it said, adding "there is still an overriding need to address structural challenges in the aviation sector."           

"The government should take this opportunity to push through with bold decisions such as classifying ATF as a declared good that would result in a uniform sales tax of four per cent across the country," the report said.   

Combined with the fall in base prices this could reduce airlines operating costs by a game-changing 30 per cent that would stimulate growth and set the industry on a more viable long-term trajectory, the CAPA report observed.  

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp