In the biggest ever cut in jet fuel prices, state-run oil firms on Sunday slashed aviation turbine fuel (ATF) prices by over 16 per cent in step with softening international oil prices.
The cut of Rs 11,784 per kilolitre is the single biggest reduction in the fuel price.
The oil marketing companies have done their bit by passing on every penny of the reduction in prices of jet fuel in international market, an official of the Indian Oil Corp, the nation's largest oil firm, said.
Jet fuel prices in Delhi, which has the country's second busiest airport, have been cut by Rs 11,378.19 per kl to Rs 59,650.07 with effect from midnight tonight.
"We have always believed in passing on the benefit to consumers," the official said.
The cut in ATF prices would put pressure on airlines to reduce airfares. Most of the airlines had raised airfares after the June 1 hike by over 18 per cent, or Rs 10,839.16 per kl. But they did not cut fares when oil companies on June 5
cut fuel prices by over Rs 3,000 per kl. In subsequent two revisions, prices went up and have now been cut drastically.
ATF prices in Mumbai, the city with the nation's busiest airport, have been cut by Rs 11,838.75 per kl to Rs 61,834.81 per kl.
"The sharp fall in ATF price is on account of fall in prices of jet fuel in international market," the official said.
State retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum revise ATF prices once a month based on the average price of jet fuel in the international market.
Recently, Petroleum Minister Murli Deora had said, "It (fall in crude prices) is a happy sign. It is a welcome development. But there is no scope for reduction in domestic retail prices."
"There still are huge under-recoveries (on fuel sales). I don't see how we can reduce retail prices when our companies continue to lose money," Deora had said.
Fuel prices in India are pegged at $68 per barrel, much lower than the current price of $114-115 a barrel in international market.