Jet fuel price cut by 11.3 per cent, to cost less than diesel

Jet fuel (ATF) price was cut by a steep 11.3 per cent and now it costs less than diesel. Last month, its rate had fallen below the price at which petrol is sold.

While petrol and diesel prices have so far not been changed as per the fortnightly revision, non-subsidised domestic cooking gas (LPG) was cut by Rs 103.5 per cylinder to Rs 605 a cylinder after international oil prices slumped to near six-year lows.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs 5,909.9 per kilolitre, or 11.27 per cent, to Rs 46,513.02 per kl, oil companies announced.

The reduction, which followed possibly the steepest ever cut of Rs 7,520.52 per kl or 12.5 per cent effected from January 1, has led to ATF becoming cheaper than even diesel.

Last month's reduction saw the ATF price slip to Rs 52.42 a litre, below Rs 58.91 a litre cost of petrol in Delhi. And after Sunday's cut it costs Rs 46.51 per litre and is cheaper than diesel that sells at Rs 51.52 per litre.

ATF has a higher octane than petrol and diesel is a heavier fraction in the distillation process. Traditionally, auto fuels being of lesser quality than ATF, would cost less.

But four consecutive excise duty hikes since November totaling Rs 7.75 a litre on petrol and Rs 7.50 on diesel, have reversed this.

But for these, the cumulative reduction of Rs 14.69 per litre in petrol price in nine cuts since August and Rs 10.71 a litre on diesel since its deregulation in October, would have been higher.

ATF attracts an excise duty of 8 per cent.

The cut, effective, is the seventh reduction in jet fuel rates since August. 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.

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