ATF Rates Jump 8.5%; Government Limits Increase to Ease Impact on Flyers

Aviation turbine fuel (ATF) prices in India have risen sharply following a surge in global crude oil prices driven by tensions in West Asia. Initial data from Indian Oil Corporation showed that jet fuel prices had more than doubled to over Rs 2.07 lakh per kilolitre. Soon after, the government stepped in and clarified that domestic airlines would not bear the full burden of this spike. Authorities revised the rates to reduce the immediate impact on the aviation sector.

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Govt Steps In to Limit Impact on Domestic Airlines

The Ministry of Petroleum and Natural Gas stated that ATF prices remain deregulated and are revised monthly in line with international benchmarks. However, the recent closure of the Strait of Hormuz and ongoing geopolitical tensions created an extraordinary situation in global energy markets. Officials anticipated a steep price increase of over 100% from April 1 due to these disruptions.

To manage the situation, oil marketing companies, in coordination with the Ministry of Civil Aviation, implemented a staggered price hike of about 25% for domestic airlines. This increase translates to roughly Rs 15 per litre, significantly lower than the expected surge. Meanwhile, airlines operating international routes will pay the full increase, aligning with global fuel pricing standards.

Revised rates from April 1 show ATF prices at around Rs 1.04 lakh per kilolitre in Delhi, with higher levels in Kolkata and Chennai and slightly lower prices in Mumbai. Rising crude prices, longer flight routes due to airspace restrictions, and a weaker rupee continue to pressure airlines. With ATF accounting for up to 40% of operating costs, authorities may introduce further phased hikes. Civil Aviation Minister Ram Mohan Naidu has also urged states to reduce VAT on jet fuel to ease financial stress on carriers.

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