New Delhi:
Prime Minister Narendra Modi wants passengers to benefit from this week's deep cut in aviation turbine fuel or ATF prices, the Centre will communicate to airlines.
On Monday, oil companies announced a cut of Rs. 5,500 in the price of jet plane fuel - which makes up for 40 per cent of the cost of running an airline - but carriers are yet to announce a cut in fares.
Dr Mahesh Sharma, the junior minister for aviation told NDTV that the government does not interfere with airfare pricing, but with PM Modi concerned, the Centre plans to meet the airlines on this.
"It is a competitive market that determines the pricing of air tickets but the government of India, including the Prime Minister, is concerned about passing on the benefit to passengers," said Mr Sharma adding, "Soon, we will have a meeting with airlines on predatory pricing."
Jet fuel prices have dropped by 41 per cent in the last one year; a litre of jet fuel in Delhi now costs 20 rupees less than a litre of petrol.
Airlines did not comment on lowering fares, but officials privately admit that they prefer to retain higher margins when costs are low.
They argue that given the competition, they are rarely able to charge profitable fares. On the busy Delhi-Mumbai route, for instance, the cheapest air ticket costs Rs 3,500 and an airline loses 2,000 per ticket at this fare. But, the officials say, with 120 daily non-stop flights between the two cities, there is little scope to charge more.
"This is the price we used to buy tickets at 10 years back. So it is not true that air fares have gone up tremendously. And if you compare our oil prices with the Middle East, it is 70 per cent higher," said Amber Dubey, who heads the aerospace division of KPMG.
But, Mr Dubey said, low oil prices, coupled with "structural reforms" soon, could usher in a new era of low-cost aviation.