Home > Aviation, Crude Oil & Petroleum > Higher ATF Restraining Growth of Aviation Sector in India

Higher ATF Restraining Growth of Aviation Sector in India

While the rebound in global aviation industry has been strong in 2010, rising aviation turbine fuel (ATF) prices may adversely affect financial prospects of the industry as a chuck of the cost comprises ATF. High interest costs are also estimated to have dented profitability of the domestic airlines for the March 2011 quarter.During the financial year 2010-11, nearly 142 million passengers were recorded at the airports in India. This reflects a growth of 15% over the previous year. Both passenger and cargo movement has been growing at a robust pace over the past few years. According to the Aviation Ministry, passenger movement on the airports is expected to reach 540 million by 2025 and scheduled carrier fleet size is forecast to more than treble from the current 430 to 1,500 aircraft.

Oil marketing companies (OMCs) have been raising aviation turbine fuel (ATF) prices over the past several months. OMCs revisit prices every fortnight. The ATF price ex-Mumbai for the fortnight beginning May 1, 2011, surged by 40% to Rs 61,429 per kilolitre compared to the average price in May 2010. Prices rose by nearly  Rs 19,445 a kilolitre.

Foreign Tourist Arrivals (FTAs) in India during the April 2011 rose to 4.17 lakh as compared to 3.54 lakh during April 2010 and 3.48 lakh in April 2009. There has been a growth of 17.7% in April 2011 over April 2010, as compared to a growth of 2% registered in April 2010 over April 2009.

Higher tourist inflow could bring a respite to the bleeding Indian aviation industry. Airline industry in India is expected to record a healthy overall growth given the improvement in foreign trade, construction of airports in non-metros and in Tier-II & Tier-III cities which will make air transport more accessible.

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