Aviation fuel price gets a hike; airfares to increase

New Delhi: High crude oil prices led India's OMCs to hike aviation turbine fuel (ATF) prices on Friday.

Accordingly, in the national capital, the price of jet fuel was raised to Rs 1,12,924.83 per kilolitre (kl) from Rs 1,10,666.29 per kl.

In the other metro cities of Kolkata, Mumbai, and Chennai, the price was increased to Rs 1,17,353.71, Rs 1,11,690.61, and Rs 1,16,583.71 per kiloliter, respectively. "ATF prices have increased by around 50 percent since the start of the year, the major reason being the increase in crude prices led by the Russia-Ukraine tensions," said Bhanu Patni, Senior Analyst, India Ratings and Research.

"The jet fuel spreads have also increased due to the global demand pickup." Notably, the hike is expected to impact airfares as well as airlines' financial positions that is under stress.

"With ATF becoming costlier, flight prices have doubled across some popular routes in the past few weeks," said Aloke Bajpai, Group CEO & Co-founder, ixigo.

"Travellers will need to book in advance for their upcoming trips if they want to get the best possible prices. Hopefully, the high demand for summer travel that the industry is witnessing will help offset fuel costs."

In India, OMCs revise jet fuel prices on a fortnightly basis. At present, fuel-based expenses account for over 35 percent of the overall operating cost of an airline. India presently has some of the world's highest rates of taxation on the ATF, which massively drives cost component. up the fuel

The industry has been urging the Centre to include the fuel type in the ambit of GST, similar to the status given to 'Bunker Diesel' which is used in the shipping sector.