India slashes jet fuel prices further

Indian state-controlled refiners have slashed jet fuel prices by 29pc this month after cutting them by 22pc in March as the coronavirus outbreak restricts demand for air travel.

Jet fuel prices in Delhi have been cut to 35,490 rupees/kilolitre ($467/kl) from 1 April from Rs50,171/kl last month. Refiners cut jet fuel prices in two tranches last month, the first on 1 March by 10.4pc and then on 21 March by 12pc.

Prices for international carriers, which do not pay Indian taxes, have also fell to $363/kl this month from $521/kl on 21 March and from $593/kl on 1 March. Jet fuel prices are typically reviewed only once a month. Jet fuel accounts for around 40pc of Indian carriers' costs, twice as much as foreign airlines because of the high taxes.

Prices were reduced in line with falling international crude prices, although this was offset by a fall in the value of the rupee against the US dollar.

All India's international and domestic flights carrying passengers have been halted, grounding over 600 aircraft in the country. Domestic airlines with mounting debts and no cash flow are struggling to pay employees and maintain aircraft. Private-sector Air Deccan has shut down and put its staff on leave without pay.

India's government now plans to start allowing domestic and international flight operationsin a staggered manner from 15 April with all private-sector carriers accepting bookings. But state-controlled Air India, the country's largest full service airline, is only taking bookings from 1 May.

Indian demand for jet fuel in March dropped by over 20pc from around 180,000 b/d a year earlier, according to state-controlled refiners. Demand for jet fuel had increased to 187,500 b/d in February from 184,600 b/d a year earlier, according to preliminary data from the oil ministry.

India's air passenger traffic rose by 9pc in February from a year earlier, with domestic airlines carrying 12.36mn passengers during the month.

By S Dinakar