New Delhi: Jet fuel (ATF) rates were today slashed by a steep 12.5 per cent, the sixth straight reduction in prices since August, as international oil prices slumped to five-year low levels.
Jet Airways shares climbed 8.62 per cent or Rs. 33.10 to Rs. 417.30 in afternoon trade on the BSE while SpiceJet was trading up 5.52 per cent or Rs. 0.95 at Rs. 18.15.
The price of aviation turbine fuel (ATF), or jet fuel, at Delhi was cut by Rs. 7,520.52 per kilolitre, or 12.5 per cent, to Rs. 52,422.92 per kl, oil companies announced today.
This is the possibly the steepest cut in rates since ATF pricing was deregulated or freed in April 2002.
The cut, effective today, is the sixth reduction in jet fuel rates since August. The price was last cut by 4.1 per cent, or Rs. 2,594.93 per kl, on December 1.
Brent crude, a pricing benchmark for more than half of the world's oil, sank 48 per cent in 2014 as US producers and the Organization of Petroleum Exporting Countries (OPEC) ceded no ground in their battle for market share amid a supply glut.
Brent fell to $57.33 a barrel, the lowest since May 2009.
ATF rates now are at their lowest level since February 2011. Jet fuel prices had hit an all-time high of Rs. 76,241.33 per kl in January but have since then receeded.
In Mumbai, jet fuel will cost Rs. 53,861.58 per kl from today as against Rs. 61,695.45 per kl previously. The rates vary because of differences in local sales tax or VAT.
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.
State-owned fuel retailers, Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise jet fuel prices on 1st of every month based on average imported cost and rupee-US exchange rate.