Flights could become cheaper as fuel prices cut

- Post Report, Kathmandu

Dec 6, 2016-

Nepal Oil Corporation (NOC) on Monday slashed prices of aviation fuel by Rs8 per litre, raising hopes of cheaper air tickets at least in the domestic sector. 

According to the state-owned enterprise, the new prices will come into effect on Monday midnight. 

As per the revised tariff, jet fuel sold to international airlines will cost $750 per kilolitre, down $81 per kilolitre. Likewise, domestic carriers will be charged Rs86 per litre, down from Rs94 per litre. 

Spokesperson for NOC Bhanubhakta Khanal said fuel prices were revised downward in line with the latest price list received from its sole supplier Indian Oil Corporation on Sunday. “We decided to slash prices as the Indian oil supplier has reduced prices of aviation fuel,” Khanal said. 

Although NOC has been adopting an auto pricing system for over the last two years, it has not reviewed prices of aviation fuel as per market trends. 

The state-owned oil monopoly has been pocketing extra profits on the sale of aviation fuel. Currently, it earns a profit of Rs10.71 per litre of fuel sold to domestic carriers and a profit of Rs18.93 per litre of fuel sold to international carriers.

The last time NOC reduced aviation fuel prices was on July 2 following orders of the parliamentary International Relations and Labour Committee. Earlier in January, the House panel had directed the Supplies and Tourism ministries to set fuel prices as per the market rate.

The committee said that NOC had been overcharging airlines on aviation fuel. Airlines have been passing the burden of fuel price hikes to travellers in the form of fuel surcharge, making airfares beyond the reach of a vast section of the population.

International airlines have frequently complained about fuel prices in Nepal. They have pointed to the high cost of fuel as the single biggest challenge for airlines flying to Nepal. It has also been reported that aviation fuel costs more than double in Nepal compared to other airports in Asia.

The latest fall in prices of aviation fuel means that domestic airlines will have to reduce the fuel surcharge, resulting in cheaper air travel.

As per a general understanding reached between the Civil Aviation Authority of Nepal and domestic airlines, the fuel surcharge can be revised if prices fluctuate by at least Rs4 per litre.

Published: 06-12-2016 08:38

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