International airfares may be in for some relief. On Monday, India’s state-run oil companies slashed aviation turbine fuel (ATF) prices for overseas flights by more than a quarter. They credited this cut to a dip in global fuel benchmarks.
Prices for domestic jet-fuel use, which saw far smaller hikes earlier this year, were left unchanged. So a price divergence designed to cushion local flyers has finally narrowed.
User-focused calibration involves political calls that evoke questions. Do aviation consumers need support, for example, at the cost of oil companies and India’s coffers, both of which bear a big burden for fuel prices that are yet to rise enough to cover actual costs overall?
Since liquefied petroleum gas prices for commercial users were raised as part of the latest round of revisions, this rejig had its losers too.
The trouble with price controls is that they draw attention to trade-offs on policy support. It would be better for the government to distance itself from such decisions altogether and let the market take over.
But it’s not easy to relieve fuel pricing of political pressures and let state-run oil firms pursue their own business interests. For that, we may need to privatize them.