Due to the geopolitical tensions in West Asia, global crude oil prices were on a rise from the last few months. This not only drove up fuel prices for vehicles but also sent aviation turbine fuel (ATF) prices to record levels in India. As a result, airlines faced higher operating costs, leading to an increase in airfares and making air travel more expensive. Now, with ATF prices slashed by ₹5 per litre, could flight tickets finally become cheaper? Here’s everything you need to know.
Jet Fuel Prices Reduced By ₹5/Litre In India
According to The New Indian Express, state-owned oil marketing companies (OMCs) reduced aviation turbine fuel (ATF) prices by ₹5 per litre on Wednesday. The move brought much-needed relief to airlines, with ATF prices in Delhi falling to ₹110 per litre from ₹115 per litre over the past few months.
In other words, the price has also been cut from ₹1.15 lakh per kilolitre to ₹1.10 lakh per kilolitre.
This marks the first reduction in jet fuel prices since the conflict in West Asia drove ATF rates to record highs, significantly increasing operating costs for both domestic and international airlines. The price cut comes as global crude oil prices have softened amid easing concerns over supply disruptions and improving market sentiment.
Here’s What We Know So Far
As per reports, ATF prices in India are revised twice every month by state-owned OMCs, based on international benchmark prices and the rupee-dollar exchange rate. Last month, amid volatility in the global fuel market, OMCs increased ATF prices for domestic airlines by around 10% while introducing a fixed-rate pricing mechanism aimed at reducing fuel price volatility.
Jet fuel accounts for nearly 35-40% of an airline’s operating expenses, making fluctuations in ATF prices a key factor influencing both airline profitability and airfares in India. With fuel prices now easing, reports suggest that airlines could soon revise their fares and lower ticket prices.
In other news, the Central government has revised export duties on petrol, diesel and aviation turbine fuel with effect from July 1, while keeping excise duty on petrol and diesel sold in the domestic market unchanged.
We hope this information was helpful to you all!
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FAQs
Why were aviation turbine fuel (ATF) prices reduced in India?
ATF prices were reduced after global crude oil prices eased amid improving market sentiment and reduced concerns over supply disruptions.
How often are ATF prices revised in India?
ATF prices are typically revised twice every month by state-owned OMCs based on international benchmark prices and the rupee-dollar exchange rate.
Will flight ticket prices become cheaper after the ATF price cut?
There has been no official announcement from airlines yet. However, lower ATF prices could help reduce operating costs, which may eventually be reflected in airfares.