The Indian aviation industry has got some respite as aviation turbine fuel (ATF) or jet fuel prices have been slashed by ₹5 per litre from Wednesday. The latest cut was necessitated by softening of international crude oil prices due to a lull in the conflicts in West Asia.
ATF is currently being sold at ₹110 per litre in Delhi. This is the first cut since the jet fuel prices went up steeply due to the geopolitical situation in the region, PTI reported quoting industry sources.
ATF prices ease after record spike
This latest cut comes in the wake of the highly volatile state of fuel prices caused by the war between the US, Israel, and Iran. The war had caused disruptions in the flow of cargo via the strategic Straits of Hormuz, which are used to transport almost one fifth of the world’s oil and gas resources.
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Amid worries about energy supplies, Indian Oil Corporation (IOC) had first increased the price of Delhi ATF to ₹2,07,341.22 per kilolitre as at April 1st, an increase of 114.55 per cent from ₹96,638.14 per KL. This increase was due to the increased cost of energy worldwide because of the closure of the Straits of Hormuz.
Government stepped in to shield domestic airlines
But, the increase in price was not entirely passed on to the scheduled domestic airlines. The oil marketing companies had to revise the price of the appropriate ATF for domestic airlines in Delhi to ₹1,04,927 per kilo litre, which is about 8.5 per cent above the previous months.
The non-scheduled airlines, including charter flights and private aircrafts, were still paying the increased price.
“Later in the day, after the government intervened and directed them not to fully pass on the ATF rates to airlines, they moderated ATF prices on domestic routes,” Hindustan Times quoted an executive of an OMC requesting anonymity as saying.
Another OMC executive added, “While the government has moderated ATF rates for scheduled domestic airlines (₹1,04,927 per KL from April 1), private jets, chartered planes and unscheduled domestic airlines will pay higher rates of ₹207,341.22 per KL from Wednesday.”
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Petroleum ministry explains the pricing formula
The petroleum ministry also clarified the pricing mechanism in a post on X.
“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 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 1 April.”
The ministry further said, “In order to insulate the domestic travel costs from the substantial increase in international prices, PSU oil marketing companies of the ministry of petroleum, in consultation with the ministry of civil aviation, have passed only a partial and staggered increase of 25% (only ₹15/litre) to the airlines. Foreign routes will pay for the full increase in ATF prices consistent with what they pay in other parts of the world.”
