Aviation turbine fuel (ATF) or jet fuel prices have witnessed a sharp increase from Thursday (October 1), putting fresh pressure on the operating costs of domestic airlines. According to state-owned oil marketing companies, ATF rates have been raised by around Rs 16 per litre, while commercial LPG prices have also gone up by Rs 62.59 for a 19-kg cylinder. The latest monthly revision comes amid changes in international benchmark prices and the rupee-dollar exchange rate. ATF is a major expense for airlines and accounts for up to 40 per cent of their operating costs.
ATF price rises to Rs 137 per litre
For domestic airlines, ATF prices have been increased to around Rs 137 per litre from Rs 121 per litre. This translates into an increase of approximately Rs 16 per litre from the previous month. The latest hike follows two consecutive increases in ATF prices. In September, aviation fuel became costlier by Rs 6.28 per litre, or 5.46 per cent. This came after a Rs 5 per litre increase in August. Since jet fuel represents a significant portion of an airline’s operating expenses, sustained increases in ATF prices can add to the cost of running flights. The actual impact on airlines can vary depending on fuel consumption, route length, fleet efficiency and other operating expenses.
Will flight travel get costlier?
ATF accounts for about 35-40 per cent of an airline’s overall operating expenditure in India, making jet fuel prices a key cost for domestic carriers. Higher ATF prices are expected to increase operating costs for airlines. Higher fuel prices can eventually lead to higher airfares. However, air ticket prices are also influenced by factors such as passenger demand, competition among carriers, and seat availability.
Commercial LPG cylinder gets Rs 62.59 costlier
Along with ATF, the price of commercial LPG has also been increased. A 19-kg commercial LPG cylinder will now cost Rs 62.59 more than it did last time. The latest increase comes after a much smaller hike of Rs 9.50 per cylinder in September. Before that, commercial LPG prices had declined sharply for two consecutive months. In August, the price was reduced by Rs 192 per 19-kg cylinder, following a reduction of Rs 183.50 in July.
Commercial LPG prices had surged earlier this year
The recent fluctuations come after a major spike in commercial LPG prices earlier in the year. Between February and June, the price of a 19-kg cylinder increased by Rs 1,373, rising from Rs 1,740.50 to a record Rs 3,113.50. The sharp increase during that period came amid disruptions in global energy supplies and elevated international prices. Prices subsequently declined in July and August before beginning to rise again in September.
Why are ATF and LPG prices changing?
The prices of ATF and LPG are revised at the beginning of every month. The latest changes are linked to movements in international benchmark prices as well as fluctuations in the rupee’s exchange rate against the US dollar. Since fuel prices can also be affected by state-level taxes, including VAT, the final prices may differ from one state to another.
What about domestic LPG prices?
There is some relief for households as the price of domestic cooking gas has been left unchanged. The price of a 14.2-kg domestic LPG cylinder remains at Rs 942. Domestic LPG prices had increased by Rs 89 per cylinder between March and June, following disruptions to energy supplies and a rise in international energy prices linked to the West Asia crisis.
Petrol and diesel prices remain unchanged
There has been no fresh revision in petrol and diesel prices either. Both fuels had witnessed an increase of around Rs 7.50 per litre in May but have remained unchanged since then. The latest fuel-price revision therefore primarily affects aviation fuel and commercial LPG users, while domestic LPG, petrol and diesel prices have been kept unchanged.
(With inputs from PTI)
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