FIA demands roll back in jet fuel prices

NEW DELHI: Airlines body FIA today demanded a roll back of the 12 per cent hike in jet fuel prices by oil companies and sought appointment of an independent price regulator to deal with the issue of “irrational” pricing.
In a letter to Civil Aviation Minister Ashok Gajapathi Raju today, copies of which were marked to his deputy Mahesh Sharma and the Finance Minister, Federation of Indian Airlines (FIA) also threatened to move fair trade watchdog CCI if the “non-transparent” price increase continues.
“In March 2016, FIA members have been informed of a 12 per cent increase in prices without any explanation. No response has been received from oil companies regarding this price revision and oil pricing continues to be non-transparent to the detriment of consumers and citizens,” FIA said in the letter.
FIA is a body of four established domestic private airlines –Jet Airways, IndiGo, SpiceJet and GoAir.
Aviation Turbine Fuel (ATF), or jet fuel, price was yesterday hiked by 12 per cent by the oil marketing companies on global cues.
Jet fuel constitutes over 40 per cent of an airlines operating cost and any upward increase in the prices pushes up the cost of operations of the carrier.
“The FIA also keeps open its option to pay for fuel in line with the earlier charges,” the letter stated.
According to FIA, the average price per barrel (MOPAG) from January 2016 to February 2016 has declined by 22 per cent from a rate of USD 46.49 per barrel to 36.1 per barrel while during this period the exchange rate variation has been 1 per cent from Rs 67.60 to Rs 68.20.
“During this period there has been no variation in sales tax. We understand that there was a change in the excise duty however when you take into effect the MOPAG decline it is clear that the pricing needs to be revisited and made more transparent,” the airlines body said.
On behalf of the FIA, the airlines request that this “irrational” price revision be reversed, the letter said adding, “additionally, we submit that an independent price regulator be appointed with immediate effect.”
“In case this is not done and the non-transparent price increase continues we will be forced to refer this matter to the Competition Commission of India,” the letter said.