Jet fuel prices jump nearly 10%, airfares may rise in coming months
Higher aviation turbine fuel costs would be another pressure on airlines, which already operate in a turbulent environment.
New Delhi: Air travel in India may turn dearer in the coming months as aviation turbine fuel (ATF), the highest cost for an airline to operate, jumped nearly 10 percent.
State-owned oil marketing companies have increased the price of jet fuel for domestic airlines from ₹104.93 to ₹115 per litre.
The revised price hike, one of the biggest in recent times, comes in the wake of wild swings in global energy markets.
Fuel is the most significant operating expense for airlines, accounting for 30-40 per cent of their overall costs.
Any significant increase in ATF prices is likely to dent airlines’ profitability directly, which can ultimately be reflected in fares if the carriers decide to pass on the increased burden to the passengers.
The price hike is also linked with the introduction of a new price stabilisation mechanism by the government and fuel retailers, which will help airlines guard against sharp fluctuations of global crude oil prices due to geopolitical developments and disruptions in the supply chain.
Industry experts added that airlines are already grappling with changing demand, aircraft availability, currency movements, increasing operating expenses, and the aviation turbine fuel price is another additional burden, which would reduce margins further for highly competitive domestic carriers.
The latest revision comes at a time when global oil markets are jittery with the Middle East conflict, causing concerns across the world.
