Despite the massive increase--over 100 per cent-- in price of Aviation Turbine Fuel (ATF) or jet fuel, the domestic airline would only pay 8.5 per cent of the hike as the government and domestic Oil Marketing Companies (OMCs) stepped in to rescue the sudden burden on airlines.
ATF price hiked more than double to a record Rs 2.07 lakh per kilolitre on Wednesday, mirroring the surge in global oil prices last month due to ongoing geopolitical concerns. Still, according to the Indian government, for domestic airlines, the increase would only be 8.5 per cent.
According to PTI, domestic airlines will pay half of what other carriers, such as non-scheduled, adhoc and charter, would pay. For them, the prices have gone up by Rs 110,703.08 per kl, or 114.5 per cent, to Rs 207,341.22 per kl.
"With ATF prices in India—deregulated since 2001 and revised monthly based on international benchmarks, facing extraordinary pressure due to global energy disruptions and the closure of the Strait of Hormuz, a steep increase of over 100% was anticipated from 1 April," Civil Aviation Minister Ram Mohan Naidu said in a post on X.
"In this challenging context, the decision by PSU Oil Marketing Companies, under the Ministry of Petroleum in consultation with the Ministry of Civil Aviation, to implement only a partial and staggered increase of 25% (Rs.15/litre) for domestic airlines is both pragmatic and forward-looking, while ensuring that foreign routes bear the full market-aligned price," the Minister added.
Jet fuel prices were deregulated more than two decades ago, and rates have since been aligned with benchmark international prices in accordance with written understandings with airlines.
But with the unprecedented rise in ATF prices driven by global energy price hikes after the Middle East war, the government and state-owned oil companies have decided to adopt a calibrated approach, news agency PTI reported, citing industry sources.
While foreign and other airlines charge market rates, domestic airlines have been moderating their prices, they said.
Commercial LPG Rates Hike
In a separate development, the price of commercial LPG rose by Rs 195.50 per cylinder due to the global oil price hike following the escalation of the conflict in the Middle East.
The price of 19 kg of commercial LPG is now Rs 2,078.50 in Delhi. The last hike in March was by Rs 114.5 per 19 kg cylinder in March
This is the first time the price of ATF has crossed Rs 2 lakh per kilolitre. 1.1 million per kiloliter in 2022 after oil prices rose following Russia's invasion of Ukraine.
(With Inputs From Agencies)