Jet fuel prices expected to remain low, says ICRA

New Delhi, Sep 7 : Subdued crude oil prices, on account of the Covid-19 outbreak, are expected to keep the cost of air turbine fuel (ATF) low, ratings agency ICRA said on Monday.

“The prolonged shutdown of manufacturing activities in several countries and the subsequent impact of the outbreak on the global economic activity will keep the crude oil prices and thus, the ATF prices low,” ICRA Vice President Kinjal Shah said in a research note.

Following the pandemic outbreak, crude oil prices declined materially, reaching a low of $19 per barrel in April, thereby leading to a decline in ATF prices.

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However, crude oil prices have increased gradually since then, and currently range around $44 per barrel.

Consequently, ATF prices increased sequentially by 24.1 per cent in July and by 4.2 per cent in August.

Nevertheless, they declined sequentially by 3.4 per cent in September, which is also lower by 32.3 per cent on a YoY basis.

Lately, the Indian aviation industry has witnessed a recovery in domestic passenger traffic on a sequential basis.

In Augus, it witnessed a sequential growth of 25 per cent to 26 lakh passengers.

On a year-on-year basis, this is a decline of 77 per cent.

As per the agency, the capacity deployment in August, standing at 33 per cent (vis-a-vis August last year), is rather “a slow uptick despite recommencement of operations over three months ago”. However, it was an increase over the 27 per cent capacity deployed in July.

“The number of flights departing has also gradually increased from 416 on Day 1 to 1,156 on Day 101 (September 02, 2020). For August 2020, the average daily departures were 930, significantly lower than the average daily departures of 2,846 in August 2019, though better than 780 in July 2020,” Shah said.

“The average number of passengers per flight during August 2020 was 98, as against an average of 133 passengers per flight in August 2019. Overall, from May 25, 2020 till August 31, 2020, the domestic passenger traffic has been more than 7 million.”

Recently, the Ministry of Civil Aviation (MoCA) has permitted increasing the capacity to 60 per cent with effect from September 2.

This apart, MoCA has also amended certain provisions, like allowing airlines to provide meals on board, serve pre-packed snacks or meals or pre-packed beverages, and allowing in-flight entertainment, however,with riders.

While the scheduled international operations are yet to start, the MoCA has permitted international operations under the Vande Bharat Mission and Air Transport Bubbles.

Under Vande Bharat mission, international passenger traffic (inbound and outbound) has been 632,741 for the period May 7 to August 31.

Last month, the number of international passenger traffic was 216,666, a YoY decline of 89 per cent.


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