Indian carriers get ATF price advantage vs peers
New Delhi, April 2 -- Aviation turbine fuel (ATF) prices for domestic airlines were raised by a calibrated 8.5% on Wednesday, instead of more than doubling as warranted by a war-driven surge in global oil prices, even as rates for commercial LPG and premium petrol were also increased amid firm energy trends.
ATF or jet fuel for domestic carriers was hiked by Rs.8,289.04 per kilolitre, or 8.56%, to Rs.1,04,927.18 per kl from Rs.96,638.14 per kl last month, according to state-owned oil firms.
Domestic airlines will pay half of what foreign airlines, as well as other carriers such as non-scheduled, ad hoc, and charter, would pay. For them, the prices have gone up by Rs.1,10,703.08 per kl, or 114.5%, to Rs.2,07,341.22 per kl.
Alongside, rates of commercial LPG - the other petroleum product apart from ATF, whose pricing is deregulated - were increased by Rs.195.50 per 19-kg cylinder.
Price of select premium, or branded petrol and diesel, which make up for 2-5% of all auto fuels sold in the country, too, was increased by Rs.1.50 a litre to Rs.92.99 for 'Extra Green' diesel and by Rs.11 to Rs.160 a litre for 100 octane petrol (XP100).
Prices of normal, or unbranded petrol and diesel, remain unchanged, and so do the rates of domestic cooking gas LPG.
The Petroleum Ministry stated that while the international oil prices have jumped to over $100 per barrel in one month, "only a partial and staggered increase of 25% (only Rs.15 per litre or Rs.15,000 per kl)" was being passed on to airlines. The Civil Aviation Ministry also endorsed the number.
The difference between the two was explained by Sujata Sharma, joint secretary in the Ministry of Petroleum and Natural Gas, as one was the final rate inclusive of all levies and taxes, while the 25% number was the increase on the "base price" of ATF.
At a media briefing, Sharma said a calibrated approach has been taken on revision of ATF prices so as to have minimal impact, while Asangba Chuba Ao, Joint Secretary in the Ministry of Civil Aviation, said the move would ensure that carriers' domestic operational costs remain manageable and will not lead to the levy of additional fuel surcharge on airline tickets.
With the partial hike in ATF price, airlines would recalibrate their pricing and the move prevents a potential industry-wide crisis, he added.
The jet fuel price rise is likely to further strain airlines, which are already burning more fuel in taking longer routes for flying to Western destinations due to the war. Fuel makes up around 40% of an airline's operating cost.
Explaining the rationale for the jet fuel price hike, the Ministry of Petroleum and Natural Gas, in a post on X, said ATF prices in India were deregulated in 2001 and are revised on a monthly basis, based on a formula of international benchmarks. "Due to the closure of the Strait of Hormuz and extraordinary situation in global energy markets, the price of ATF for domestic markets was expected to increase by more than 100% on April 1," it said.
This is the first time ever that the ATF price has crossed the Rs.2 lakh per kl mark. The previous peak was in 2022 when rates hiked by Rs.1.1 lakh per kl after oil prices surged after Russia invaded Ukraine....
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