The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by Rs 3,260 per kl, or 5 per cent, to Rs 62,410 per kl with effect from midnight tonight, according to Indian Oil Corp, the nation's largest oil firm.
The fifth straight cut in jet fuel rates since mid-April, is the steepest reduction in price in 27 months. On February 1, 2010, ATF price was cut by 5.48 per cent or Rs 2,260.05 per kl. Today's reduction is larger than that in absolute number but as a percentage it is slightly lower than the February 2010 cut.
State-owned oil firms had on June 1 slashed rates by 2 per cent (Rs 1,376.81 per kl) and Rs 753.8 per kl cut in prices in three previous fortnights.
After today's reduction, ATF price have come down to November 2011 levels after hitting a high of Rs 67,800.3 on April 1 this year. Jet fuel had hit an all-time high peak of Rs 71,028.26 per kl in August 2008 shortly after international oil rates touched a record $147 per barrel.
In Mumbai, jet fuel will cost Rs 63,178 per kl from Saturday as against Rs 66,587.90 a kl now. Jet fuel constitutes over 40 per cent of an airline's operating cost and the reduction in prices will ease the burden of the cash-strapped airlines.
No immediate comment was available from the airlines on the impact of the price reduction on passenger fares.
The three fuel retailers -- IOC, Hindustan Petroleum and Bharat Petroleum -- revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.