Some Relief For Airlines: ATF Prices Cut Before Schedule

The prices of aviation turbine fuel (ATF) has been reduced by 12 percent by state-owned oil retailers with effect from 21 March. These rates are generally revised on the first of every month. However, according to a CNBC-TV18 report, the airlines have been requesting the government to revise oil prices on a weekly basis to receive the benefit of the decline in global oil prices.

Accordingly, IOCL's website was updated with the new lowered ATF rates:

Revenues of domestic as well as international airlines are expected to be severely impacted due to weak demand amid travel restrictions and visa advisories imposed due to the coronavirus pandemic. Operations of some airlines have been suspended.

Earlier this month, Interglobe Aviation, the parent of IndiGo airlines, issued a warning that its "quarterly earnings to be materially impacted" from the dip in bookings, amid coronavirus fears.

On 11 March InterGlobe Aviation in a stock exchange filing said, "Over the past few days...week-on-week, we have seen a 15-20% decline in our daily bookings. Please note that the numbers could change from here based on how the situation evolves."

"We expect our quarterly earnings to be materially impacted because of the above. In addition, the rupee has also depreciated sharply which will have an adverse impact on our dollar denominated liabilities primarily on account of capitalized operating leases," it added.

Further, the rupee depreciated beyond 75/dollar for the first time ever this week. The domestic currency's depreciation hurts the dollar-denominated liabilities of airline businesses.