Touchdown

New Delhi, Nov. 15: Low-cost carriers such as SpiceJet are likely to cut airfares as oil companies today announced a jet fuel price cut of over 12 per cent, or Rs 5,585 per kilolitre, following a fall in global crude oil prices. However, the bigger airlines want to wait and watch before taking a decision.

“We have been taking a hit ever since jet fuel prices started going up and we passed on only a part of the fuel hike then ... we need to recoup as well as take into consideration the fact that the dollar’s value has risen visa-vis the rupee and much of our expenditure is in dollars. We will watch how the situation emerges,” Jitendra Bhargava, director of Air India, said.

Air India, along with other airlines, has bought or leased aircraft and has to pay instalments and rentals in dollars.

Some small airlines said, “We will take a call by Monday. A fare cut is in the works and only the quantum of reduction is being worked out.”

Kingfisher, which runs a full-value airline as well as a low-cost version, will take a call on fare cuts later. “There has been no decision on fare reduction,” said Prakash Mirpuri, spokesperson for the Vijay Mallya-run airline.

Large airlines control 78 per cent of the air passenger traffic and the fare cut by small carriers is unlikely to trigger a competition.

However, the government could force them to cut fares as it has given them substantial sops and may demand that airlines repay by cutting fares.

State owned oil firms had slashed jet fuel prices by about 20 per cent last month and the government had abolished customs duty on jet fuel to bail out the ailing airlines, most of whom were deeply in the red.

The government had also brokered a deal between the state-run oil companies and the airlines, which had defaulted on the payment of jet fuel bills.