Indian airline operators are unlikely to reduce fares immediately following another cut in jet fuel prices announced on Saturday, with the industry saying the earlier price reductions have failed to push up the demand for air travel. State-run oil marketing companies have slashed air turbine fuel (ATF) rates by a further 7% with effect from Sunday midnight , the 11th cut since last September. But officials of most of the airlines said there is no decision as yet on lowering air fares.

According to estimates, fuel cost makes for 40% of an airline's operating costs. Oil companies have cut ATF prices by Rs 2,052 per kilolitre (kl) to Rs 27,106 per kl in New Delhi and to Rs 27,861 per kl from the earlier levels of Rs 29,985.19 per kl in Mumbai. ATF prices had peaked to Rs 71,028.26 per kl (in Delhi) in August last year on international crude prices touching historic highs of Rs 147 per barrel.

Meanwhile, industry observers are of the opinion that despite airfares going up and lower aviation turbine fuel prices, airlines will not be able toachievet positive results in the fourth quarter of the current financial year.

Reasons for theaviation sector to not perform range from poor load factors to high aircraft maintenance costs, to lower yields per passenger which the airlines have to grapple with before posting profits. The airline industry is collectively expected to post losses of Rs 4,000 crore for this financial year

Airlines like Jet Airways, Kingfisher Airlines and Air India collectively have to pay Rs 4,000 crore to oil marketing companies (as on February 1). Second, they also have to clear their dues of Rs 2,500 crore to the Airport Authority of India for using the airport infrastructure.

Though crude oil has now fallen to around $45 a barrel from its peak at $147 a barrel in August last year, it is not soon enough to prevent carriers from posting losses for the fourth quarter of the current fiscal year.