Aviation fuel prices have been slashed by 5.17 percent with effect from the intervening nights of March 31 and April 1, 2017, giving rise to a possibility of a drop in airfares or a spurt in the share prices of Indian aviation companies.
A kilo litre of aviation turbine fuel (ATF) will now cost Rs 51,482, down from Rs 54,293 per kl, according to an update by state-run Indian Oil Corporation, or IOC.
The price was Rs 46,826/kl as on October 1, 2016 and Rs 42,157/kl as on April 1, 2016, translating into an increase of about 9.94 percent and 22.11 percent, respectively, when compared to the latest price.
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Aviation fuel accounts for about 25-30 percent of operating costs for Indian air carriers.
The reduction in ATF prices may or may not result in a corresponding fall in airfares since the April-June quarter is considered peak season since most schools and colleges across the country are closed for holidays and people travel to beat the summer heat.
Indian air carriers flew 86.55 lakh (8.65 million) domestic passengers in March as against 74.76 lakh (7.47 million) in February 2016. However, it was down from 9.57 million passengers that India's 11 carriers ferried in January 2017. The 12th commercial airline to commence business was Zoom Air, in February.
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Budget carrier IndiGo Airlines maintained its position as the largest carrier in terms of passengers flown, with a market share of 39.5 percent, though lower from 39.8 percent in January 2017.
Full-service carrier Jet Airways saw its market share go up to 15.8 percent (15.5 percent in January 2017), while national carrier Air India's market share declined to 13.5 percent from 14.1 percent in January 2017.
Another budget carrier, SpiceJet, increased its market share to 13.1 percent in February 2017 from 12.8 percent in January 2017. Go Air, belonging to the Nusli Wadia Group, saw its market share go up marginally to 8.7 percent from 8.2 percent in January 2017.
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Prices of petrol,diesel reduced
The IOC also cut prices of petrol and diesel by Rs 3.77 per litre and Rs 2.91 per litre, respectively.
Petrol now costs Rs 66.29/litre and diesel Rs 55.61/litre, respectively, in Delhi. Prices vary from city to city, depending on state levies. In Delhi, excise duty (Rs 21.48/litre), dealer commission (Rs 2.56/litre) and VAT (Rs 14.09) account for about 57.5 percent of the final price.