Govt caps ATF price hike at 25 per cent to curb airfare surge
Government adopts staggered pricing strategy as global energy disruptions and West Asia tensions push aviation fuel costs to historic highs.
In the wake of the price of aviation turbine fuel (ATF) or jet fuel getting more than doubled to a record Rs 2.07 lakh per kilolitre on Wednesday (April 1), Civil Aviation Minister K Rammohan Naidu said that the public sector oil marketing companies have decided to implement only a staggered increase of 25 per cent in a bid to shield passengers from sharp fare hikes. Aviation Turbine Fuel (ATF) accounts for around 40 per cent of an airline's operational costs.
Pricing mechanism and pressure factors
Elaborating further, Naidu stated in a post on X that ATF prices have been deregulated since 2001 and revised monthly based on international benchmarks.
“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,” said Naidu.
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“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,” he added.
Govt stance and acknowledgement
The Union Minister further stated that the calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, and support the continued stability of the aviation sector at this crucial juncture.
Naidu also said that he was grateful to Prime Minister Narendra Modi and Petroleum Minister Hardeep Singh Puri for this timely and considerate intervention on ATF pricing.
Operational strain on airlines
Airlines are already grappling with higher operational costs due to the West Asia conflict. Indian carriers are burning more fuel for operating many international flights as they are forced to take longer routes due to airspace curbs in the West Asia region.
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The announcement comes after the prices more than doubled to a record Rs 2.07 lakh per kilolitre on Wednesday, alongside a Rs 195.50 increase in commercial LPG cylinder rates. The surge reflects elevated global oil prices amid the widening West Asia conflict.
ATF in Delhi was raised by 114.5 per cent to Rs 207,341.22 per kl, marking the first instance of crossing Rs 2 lakh. This follows a prior hike on March 1. Airlines, already operating longer routes due to airspace restrictions, face added cost pressures, with fuel comprising about 40 per cent of expenses.
(With agency inputs)