ATF price hike pinches airlines

February will be the second consecutive month of ATF price rise

BY A CORRESPONDENT
February 8, 2006

Aviation Turbine Fuel (ATF) prices continue to be on the upswing. ATF price rise for February for international airlines is 5%, while for domestic carriers it is 3%. This is the second consecutive month of ATF price rise.

The price rise is all the more hard on airlines since the lean travel season has just started. Despite the tightening belts, bith domestic and international airlines have been forced to cut fares to boost travel.

The price rise in January was 7.4-7.8%. ATF prices in India are fixed by the public sector oil marketing companies every month. In India, only Air India and Jet Airways have the permission for ATF hedging to guard against ATF price volatility.

Airlines' hopes to reduce surcharges stand dashed. In December, low-cost airline SpiceJet had reduced surcharges when the ATF prices had taken a brief dip. For passenger jets, ATF constitutes 30% of the operational costs.