Home >News >India >ATF prices slashed for the second time in September
Aviation turbine fuel accounts for 35%-40% of the cost of running an airline in India. (Ramesh Pathania/Mint)
Aviation turbine fuel accounts for 35%-40% of the cost of running an airline in India. (Ramesh Pathania/Mint)

ATF prices slashed for the second time in September

  • ATF prices had been raised in June, followed by price hikes in July and August before they were slashed in September

In a respite for cash-strapped Indian airlines, the price of aviation turbine fuel (ATF) was slashed on Wednesday for the second time in September, as the global crude prices fell during the past few days following price cuts from Gulf producers as a result of slack demand due to the ongoing covid-19 pandemic.

Indian Oil Corporation Limited (IOC) revised its ATF, or Jet fuel, prices on 16 September, which stood at Rs39,492.53 per kilolitre in New Delhi, down from 1 September price of Rs42,447.91 per kilolitr.

ATF rates are revised on the first and sixteenth day of each month to bring them at par with international crude oil prices and forex rates.

ATF prices had been raised in June, followed by price hikes in July and August before they were slashed in September.

Global crude price stood at $41.14 on Wednesday morning, according to Bloomberg data, down 36.28% on an annual basis.

Any spike in international crude oil prices impacts Indian aviation against the backdrop of factors such as the Organization of the Petroleum Exporting Countries and Russia cutting supplies, the US imposing sanctions on Venezuelan state-owned oil company Petróleos de Venezuela SA, and US President Donald Trump pulling the country out of a historic 2015 accord with energy-rich Iran.

Aviation turbine fuel accounts for about 35-40% of airlines' total costs for operation. At a time when domestic airlines are struggling to keep their costs down, the fall in ATF prices comes as a respite for airlines' finances.

"The price of ATF rose substantially between June and August, which added to costs even though passenger demand remained somewhat subdued due to the ongoing pandemic," said a senior airline official, who didn't want to be named.

"The fall in ATF prices will aid airlines in their endeavour to cover their variable costs," the senior airline official added.

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