Aviation turbine fuel (ATF) prices have been increased sharply by around Rs 16 per litre from Thursday, adding to the cost pressures already faced by airlines. ATF prices for domestic airlines have risen from Rs 121 per litre to around Rs 137 per litre, says the state-owned oil marketing companies.
The increase comes amid strong international energy benchmarks and is another significant rise in aviation fuel prices in recent months. ATF is one of the largest operating expenses for airlines and can account for as much as 40 per cent of their total operating costs.
So a sustained increase in fuel prices could put pressure on airline expenses and ticket pricing.
The latest revision follows an increase of Rs 6.28 per litre, or 5.46 percent, in September. ATF prices had also been raised by Rs 5 per litre in August. The consecutive increases highlight the impact of international energy prices on fuel costs in the domestic aviation sector.
Apart from ATF, commercial LPG prices have also been increased. The price of a 19-kg commercial LPG cylinder has increased by approximately Rs 62.50, according to the state-owned oil companies. The increase is also associated with movements in international benchmark prices.
Commercial LPG prices had increased by Rs 9.50 per 19-kg cylinder in September. But that came after sharp cuts in the previous two months. The prices were cut by Rs 192 in August and Rs 183.50 in July to ease commercial users such as restaurants, hotels and other businesses.
The recent changes come after a sharp rise in commercial LPG prices earlier in the year. Between February and June, the price of a 19-kg commercial LPG cylinder increased by Rs 1,373, from Rs 1,740.50 to Rs 3,113.50. That price declined later in July and August before the recent upward revision.
Fuel prices are closely watched by businesses and consumers because they affect transportation and operating costs in many sectors. ATF is particularly critical for airlines because it is the bulk of their operating cost.
Higher fuel costs have a large impact on carriers’ financial burden and may affect future fare decisions.
LPG is an important component of cooking and other operations for commercial institutions. As such, restaurants, hotels and other businesses using 19-kg cylinders might face higher operating expenses once again due to the increase.
The latest ATF and commercial LPG revisions reflect the continuing influence of global energy prices on India's domestic fuel market. Airlines and commercial establishments will now have to factor the higher fuel costs into their operating expenses.
