Indian price hike adds to airlines’ problems

Spanish Market: Oil products
04/05/10

Singapore, 4 May (Argus) — India's state-owned refiners have again raised jet fuel prices for international and domestic airlines because of rising crude oil prices.

From 1 May, international airlines began paying about 7-8pc more for supplies. Retail prices in New Delhi and Kolkota rose 8pc and 7.4pc to $749.95/kl and $788.07/kl respectively. Buyers in Mumbai and Chennai are paying 7.98pc and 7.94pc more as their prices rose to $744.85/kl and $747.61/kl respectively.

Domestic airlines are now buying jet fuel at prices at the highest level since late 2008. Prices in New Delhi and Kolkota rose 0.65pc and 0.56pc to 42,452 rupees/kl ($952.45/kl) and Rs50,915/kl respectively. Domestic airlines buying in Mumbai and Chennai will pay 0.65pc and 0.70pc more at Rs43,824/kl and Rs46,875/kl. Domestic prices are often higher than prices paid by international airlines because of additional taxes levelled by state and federal governments.

This will put further pressure on Indian airlines' profitability. State-owned Air India already has an outstanding bill of Rs12bn ($270mn) because of its unpaid jet fuel fees payable to India's three state-owned refiners, civil aviation Praful Patel told India's parliament last month. Air India is estimated to post a loss of Rs54bn during the 2009-10 fiscal year ended 31 March, he said. The government in February gave Air India $174mn to ease its cash flow problems.

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Indian price hike adds to airlines’ problems

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