With airlines reeling from high fuel costs, oil companies in India are to reduce aviation turbine fuel (ATF) prices six per cent from February 1.

The move is expected to spur renewed revenue growth. The base price of the fuel is expected to be lowered INR2,091 per kilolitre (US$47), based on the average Arab Gulf price through January, when prices to went to $854 per KL.

There is uncertainty, reported India's Economic Times, whether savings will be passed on to customers, who are expected to continue paying INR650 fuel surcharges as well as congestion fees of INR150 until airlines recover losses.

Aviation fuel prices have fallen, but not by as much as crude oil prices which have dropped below the psychologically crucial US$60 per barrel level. The price is determined by India's three public sector oil companies - IndianOil, Bharat Petroleum and Hindustan Petroleum - which provide aviation fuel to airports nationwide.

Some international airlines have begun lowering fuel surcharges in the improved operational environment. Singapore Airlines has reduced the surcharge to $78 per passenger from $82 on long-haul flights.

The article noted that fuel now accounts for almost a third of an airline's operating costs. The problem has been exacerbated in India as only Jet Airways and Air India are authorised to offset fuel expenses through hedging.