The Union government said on 1 April that Oil Marketing Companies (OMCs), in consultation with the Ministry of Civil Aviation, have implemented only a partial, staggered increase of 25% (only ₹15/litre) for airlines.
Foreign routes will pay the full increase in ATF prices, also known as jet fuel prices, consistent with what they pay in other parts of the world, the government clarified.
“ATF prices in India were deregulated in 2001 and are revised on a monthly basis based on a formula of international benchmarks. Due to the closure of the Strait of Hormuz and the extraordinary situation in global energy markets, the price of ATF for domestic markets was expected to increase by more than 100% on 1 April,” a post on X by the Ministry of Petroleum and Natural Gas said.
Earlier, a PTI report said the price of aviation turbine fuel (ATF), or jet fuel, was more than doubled to a record ₹2.07 lakh per kilolitre on Wednesday, but domestic airlines will not have to pay the steep increase, as a mechanism is in place to shield them.
“In order to insulate the domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies of the Ministry of Petroleum, in consultation with the Ministry of Civil Aviation, have passed only a partial and staggered increase of 25% (only ₹15/litre) to the airlines. Foreign routes will pay for the full increase in ATF prices consistent with what they pay in other parts of the world,” the post by the Ministry said.
Alongside, commercial LPG rates were raised by ₹195.50 per cylinder, mirroring the surge in global oil prices linked to the widening West Asia war, the news agency said.
ATF price in Delhi was hiked by ₹110,703.08 per kilolitre, or 114.5%, to ₹207,341.22 per kl, according to state-owned fuel retailers.
ATF, being a completely deregulated product, is priced at prevailing benchmark international prices. This is in accordance with a written understanding with the airlines, news agencies said.
So the new rates will apply for any international airline refuelling in India from Wednesday, industry sources told news agency PTI.
Domestic airlines shielded Domestic airlines, however, will not have to pay the steep rates, as a mechanism is in place to prevent the entire burden from being passed on to them, the PTI report said
Union Minister of Civil Aviation, Ram Mohan Naidu Kinjarapu, thanked Prime Minister Narendra Modi and Union Petroleum Minister Hardeep Puri for their timely intervention.
“This 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. It will also benefit the broader economy by ensuring the smooth movement of cargo and maintaining vital air connectivity for trade and logistics,” Ram Mohan said in a post on X.
This is the first time ever that the ATF price has crossed the ₹2 lakh per kl mark. The previous peak was in 2022, when rates were hiked to ₹1.1 lakh per kl after oil prices surged following Russia's invasion of Ukraine.
This is the second monthly rate increase. Prices on 1 March were hiked by 5.7%( ₹5,244.75 per kl).
In order to insulate the domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies have passed only a partial and staggered increase of 25%.
The rising prices will further strain airlines, which are already burning more fuel to take longer routes to Western destinations because of airspace closures due to the war. Fuel accounts for around 40% of an airline's operating costs.