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ATF prices hiked by 10% to 55,737.91 per kl in Delhi

The three fuel retailers — IOC, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd — revise jet fuel and non-subsidised LPG prices on the first of every month, based on the average international prices in the preceding month. Photo: Ramesh Pathania/MintPremium
The three fuel retailers — IOC, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd — revise jet fuel and non-subsidised LPG prices on the first of every month, based on the average international prices in the preceding month. Photo: Ramesh Pathania/Mint

  • Jet fuel prices are revised every fortnight by state-run oil marketing companies, and have been on the rise since October

New Delhi: Oil marketing companies (OMCs) on Monday hiked prices of aviation turbine fuel (ATF) by about 10% over last month as global crude oil prices firmed up on improved demand. Jet fuel accounts for about a fourth of expenses for major domestic airlines.

ATF prices stood at 59,400.91 per kiloliter (kl) at New Delhi on Monday, according to a notification by Indian Oil Corp. Ltd (IOCL).

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ATF prices were increased to 55,737.91 per kl in New Delhi on 16 February from 53,795 per kilo litre on 1 February. Jet fuel prices are revised every fortnight by state-run oil marketing companies, and have been on the rise since October.

As of Monday, ATF prices in Mumbai stood at 57,519.65 per kl, in Chennai it was at 60,658.61 per kl and in Kolkata it was at 63,828.81 per kilo litre.

In comparison, on 1 February, in Mumbai ATF price stood at 51,900 per kilo litre, Chennai ( 54,845), and Kolkata ( 58,181). ATF prices differ across cities due the taxes levied by states.

“The ATF prices increased sequentially by 24.1% in July 2020 and by 4.2% in August 2020. However, it declined sequentially by 3.4% in September 2020 and by 5.6% in October 2020, before increasing 4.6% in November 2020, 9.1% in December 2020, 10.2% in January 2021, and 5.4% in February 2021 (as on 1 February 2021)," said Kinjal Shah, vice president, ICRA, in an 8 February report.

The price of Brent crude stood at $65.36 a barrel on Monday, a rise by 30% on an annual basis, according to Bloomberg data.

The increase in ATF prices is linked to a surge in international crude oil prices, though Indian state and central governments levy huge taxes on the fuel.

Oil-marketing companies like Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation follow import parity pricing for ATF.

Import parity pricing implies a price-setting mechanism in which the price is set on the basis of the cost of importing it.

Airlines, whose finances have been battered by the ongoing covid-19 pandemic, see the rising ATF prices as a further impediment towards a recovery.

"The government must include ATF under the Goods and Services Tax (GST) regime, which would bring relief to airlines," said a senior airline official with a prominent no-frill carrier.

Expenses towards aviation turbine fuel contributes to about 25% of expenses at two listed Indian airlines, InterGlobe Aviation-operated IndiGo and SpiceJet Limited.

According to IndiGo, aircraft fuel expenses for the December quarter stood at 1,142.91 crore, while the airline's passenger revenue stood at 4,909.98 crore.

During the same period, SpiceJet's operating expense towards aviation turbine fuel stood at 453.87 crore while the airline's operating revenue stood at 1,691.65 crore.

Both IndiGo and SpiceJet reported fourth straight quarterly loss during the October-December 2020 quarter.

IndiGo reported a quarterly loss of 620.14 crore during the December quarter while rival SpiceJet Ltd reported a loss of 66.78 crore for the December quarter.

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