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SpiceJet extends flight cancellations till January 31

NEW DELHI: In possibly the sharpest-ever cut in the country, oil companies have slashed aviation turbine fuel (ATF) prices by 12.5%. This four-year low in ATF prices, now Rs 52.4 a litre in Delhi, will help airlines as jet fuel accounts for 40-50% of an airline’s operating cost in the country, but is unlikely to bring cheer to flyers as airlines are unlikely to cut fares proportionately.The reason: Cash-strapped SpiceJet has cancelled 115 flights a day as many of its Boeing 737s have been repossessed by leasers due to non-payment of rentals. Cashing on the resultant seat crunch, other airlines have sent their fares zooming this peak travel season. Such is the situation, the aviation ministry proposed a maximum fare cap of Rs 20,000 on domestic sectors.“Fares here have never gone hand-in-hand with oil prices and overall costs. That is why most Indian carriers are struggling to avoid a shutdown,” said a senior airline official.Embattled SpiceJet COO Sanjiv Kapoor tweeted: “ATF rate per KL in Delhi today reduced 12.5%, or by approx Rs 7,500 per KL. Much needed relief given high cost of operations in India.” Other airline officials say that fare cut can be considered only if ATF prices remains consistently low.On Thursday, ATF price in Delhi was cut by Rs 7,520.52 per kilolitre (kl), or 12.5%, to Rs 52,422.92 per kl. Jet fuel pricing was deregulated in April 2002. This is the steepest cut since then. ATF price was last cut by 4.1%, or Rs 2,594.93 per kl, on December 1, 2014. The prices had hit an all-time high of Rs 76,241.33 per kl last January but have since then receded.Jet fuel accounts for 40% to 50% of an Indian airline’s total operating cost as ATF for domestic flights here is the priciest in the world. The price reduction will help airlines but is unlikely to lead to cheaper flying, though the upcoming lean travel period will give the flyers cause to cheer. “Every year, peak winter travel dips sharply from January 15 and airlines drop fares to fill up their planes. This year too, most airlines such as IndiGo, Jet and GoAir have come out with special offers for the lean season that begins from mid-January and lasts till April-end,” the senior airline official said.