Home / News / India /  Big relief for airlines as OMCs reduce ATF prices

Jet fuel prices on Saturday were reduced by 2.2% by the oil marketing companies (OMCs), as Brent prices continue to correct on increasing pessimism about slowing growth. 

The price of aviation turbine fuel (ATF) – the fuel that helps aeroplanes fly – were cut by 3,084.94 per kilolitre, or 2.2%, to 138,147.93 per kl, a price notification of state-run fuel retailers showed. The revised price is for local airlines.

In Delhi, ATF price has been reduced to 138,147.95/kl and in Mumbai, the rate has been slashed to 137,095.74/kl.

This is only the second reduction in jet fuel rates this year. Prices had peaked to 141,232.87 per kl ( 141.23 per litre) in June.

The prices also differ from state to state, depending on the incidence of local taxation.

ATF prices are revised on the 1st and 16th of every month based on rates of benchmark international oil rates in the previous fortnight.

There was no change in rates on 1 July.

Prior to that, the rates were hiked by the steepest ever 16% to catapult rates to an all-time.

Meanwhile, Indian airline executives have formed a committee to meet with public sector OMCs to discuss the issue of the rising ATF prices.

The committee of airlines and OMCs – SpiceJet, GoFirst and Indigo – leading it along with representation from Vistara and other airlines and public sector OMCs i.e. Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation.

International oil prices

Global oil rates have softened since on fears of recession in major economies. Oil prices are at pre-Ukraine war levels.

On 16 June, the price of ATF was increased by 19,757.13 per kl. That followed a marginal 1.3% ( 1,563.97 per kl) cut in rate on 1 June.

But for the one-off decrease on 1 June, ATF prices have been on the rise throughout this year.

In all, rates have been increased 11 times since the start of 2022. This has led to rates almost doubling in six months.

Prior to the cut on Saturday, prices had gone up by 91% ( 67,210.46 per kl) since 1 January. 

With jet fuel making up about 40% of the operating cost of an airline, the increase in prices had resulted in a rise in the cost of flying. Now there has been a marginal relief.

“Airlines in the Asia Pacific may face significant cost pressures into 2023 as inflationary impacts affect key cost categories even as their revenues begin to benefit from accelerating market reopenings," Bloomberg Intelligence analyst Tim Bacchus wrote in a note on Friday.

Meanwhile, prices of petrol and diesel remained unchanged at 96.72 per litre and 89.62 a litre, respectively.

An excise duty cut by the government had helped reduce the price of petrol by 8.69 a litre and diesel by 7.05 per litre on 22 May. But for that, the base price has remained unchanged since 6 April.

Before that, prices had risen by a record 10 per litre each.

The retail prices of petrol, diesel and domestic cooking gas are way below the cost. Petrol and diesel rates are revised daily, based on equivalent rates in the global market.

With agency inputs

Meghna Sen
Business journalist tracking markets, companies, economy and crypto for Livemint. She has 6 years of experience with online and print publications. Email: meghnasen08@gmail.com
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