07 June 2021
In a surprise move, NOC has reduced ATF Jet-A (aviation turbine fuel) by 20%. A sharp dive from US$ 893 per kilo liter to US$ 715 per kilo liter. The new price comes into effect from mid-night, 06 June 2021.
NOC, in its press release today, has mentioned this decision as historic, meant for the pandemic period, as made to support the aviation industry and to help level down international air fares. The mark up (cost+) has been reduced from the existing 40% to 15%. The mark up went up to 70% in the past, says the press release. NOC being a state-owned business entity empowered with the state monopoly has to fulfill both-edge responsibilities of ensuring efficient and profitability and, on the other hand, providing support to other economic sectors in the vertical chain. This new decision seems directed towards this end. Aviation seems optimistic about it.
Current international market price of ATF per kilo liter hovers around US$ 462. May-prices (approximate) vary in different airports, Dammam US$ 589.00, Dubai US$ 530.00, Kuala Lumpur US$ 573.00, Beijing US$ 649.00, Dhaka US$ 550.00, and Delhi US$ 655.00. Before this new price reduction, there was a hugely questionable price gap between the NOC price and international market prices. That had been a key deterrent factor for those interested in international air services from and into Nepal.
At the end of the day, fuel being a significant cost factor, the price reduction is supposed to help airlines flying in and out of Nepal in their micro-economics. This should help air fare reduction, help grow airline market demand, and support the overall economy. The chain of effect will be keenly expected by the market and government.