Air fares unlikely to witness any decline

New Delhi: With major airlines suffering huge losses, air fares are unlikely to witness any decline despite oil companies cutting jet fuel prices for the second time in a month.

Officials of major carriers said that despite the reduction in the prices of aviation turbine fuel (ATF), the jet fuel rate remained almost 50 per cent higher than the same time last year.

The ATF prices have risen from May 2010 till April this year by over 55 per cent, they pointed out.

As some of the airlines were facing a near bankruptcy situation with very high accumulated losses, the industry was not in a position to on pass any benefit of ATF rate reduction to customers at this stage, they said.

The officials, all requesting anonymity, said the airlines were already offering various promotional schemes and packages to attract fliers during the peak summer season.

"None of us are in a position at this moment to lower fares any further," one official said categorically.

Oil companies have put carriers like Air India and Kingfisher on a cash-and-carry basis to pay upfront for their daily ATF consumption.

Fuel cost accounts for 40 per cent of the airlines` operating costs and the ATF rates vary from airport to airport — ranging from four to over 30 per cent — depending upon the state-level sales tax rates.