Local airlines will benefit from automated adjustments of fuel prices in line with the international market as it will bring them and foreign carriers on a level playing field in terms of fuel costs, said the chief executive of a private airline.

The government enabled the automated adjustment from March 8 as per conditions of $4.7 billion in loans from International Monetary Fund, to reduce pressure from the need to provide subsidies and to use such resources on social protection programmes.

Following the adjustment, prices of octane, petrol, diesel and kerosene declined by as much as Tk 4 per litre.

The energy and mineral resources division did not disclose whether this adjustment will affect the rate of jet fuel, which is used by airlines.

"Introduction of automated fuel price adjustment is a welcome move. We, from the aviation sector, have been demanding for international prices of fuel," said Imran Asif, chief executive officer at Air Astra, in an interview with The Daily Star.

"Although the government is yet to publish any notification (on the system incorporating jet fuel), we expect it will do so soon," he said.

Airlines used 4.71 lakh tonnes of jet fuel in fiscal year 2022-23, which was 10 percent higher year-on-year, as per Bangladesh Petroleum Corporation.

Aviation fuel accounted for 6.4 percent of the 73.46 lakh tonnes for fuel oil used byt Bangladesh last fiscal year.

Fuel costs account for almost half of the total operating cost of an airline. For a low-cost carrier, the fuel cost is around 60 percent of its total cost, said Asif.

Local airlines face competition with the foreign carriers in transporting passengers on the international routes. And high fuel cost here is one of the reasons that put the local airlines on an unequal footing with their foreign counterparts, he said.

"Except Kathmandu, Bangladesh perhaps has the highest price of jet fuel in the region. We will become competitive with the foreign airlines if we can buy fuel at international rates from Bangladesh," said Asif.

Airlines of other countries operating from Dhaka and Chattogram take fuel from their home countries at lower rates than the rates here. So, they enjoy a competitive advantage over us, he added.

Nearly 30 foreign carriers operate flights to and from Bangladesh, which handled 1.53 crore air travellers in fiscal year 2022-23, up 33 percent year-on-year, according to data of the Civil Aviation Authority of Bangladesh compiled by the Bangladesh Bureau of Statistics.

The Air Astra CEO said foreign carriers transport nearly 70 percent of foreign travellers. And local airlines will be able to secure more share of the market if they can compete with regard to fare prices, he said.

Asif said local airlines would also be able to attract more passengers if they can reduce fares in tune with automated adjustments of fuel prices.