Airline ticket prices set to become costly? Govt hikes ATF prices for 10th time this year

The price of aviation turbine fuel (ATF) was hiked by Rs 6,188.25 per kilolitre, or 5.29 percent, to Rs 1,23,039.71 per kl (Rs 123 per litre) in the national capital, as reported by PTI.

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Jet fuel prices have been on a rise since the beginning of 2022. However, this time, on May 16, the jet fuel prices were hiked by a steep 5.3 percent - the tenth straight increase this year -- to an all-time high, in line with a surge in global energy prices. The price of aviation turbine fuel (ATF) -- the fuel that helps airplanes fly -- was hiked by Rs 6,188.25 per kilolitre, or 5.29 percent, to Rs 1,23,039.71 per kl (Rs 123 per liter) in the national capital, according to a price notification of state-owned fuel retailers.

This is the 10th straight increase in jet fuel prices this year. Meanwhile, petrol and diesel prices remained unchanged for the 41st straight day after rising by a record Rs 10 per liter each. Jet fuel prices are revised on the 1st and 16th of every month, while petrol and diesel rates are revised daily, based on equivalent rates in the international market.

Petrol and diesel prices were hiked by Rs 10 a liter between March 22 and April 6 and have remained on freeze thereafter. State-owned oil firms have offered no reason for keeping petrol and diesel prices on freeze while raising ATF rates. Petrol costs Rs 105.41 a liter in the national capital and diesel is priced at Rs 96.67 per liter.

The increase in ATF price comes on the back of the steepest ever hike of 18.3 percent (Rs 17,135.63 per kl) effected on March 16 and a 2 percent (Rs 2,258.54 per kl) increase on April 1. Prices were increased by a marginal 0.2 percent on April 16, followed by a Rs 3,649.13 per kl (3.2 percent) hike on May 1.

ATF in Mumbai now costs Rs 1,21,847.11 per kl, while it is priced at Rs 1,27,854.60 in Kolkata and Rs 1,27,286.13 in Chennai. Rates differ from state to state, depending on the incidence of local taxation. Fuel rates have been increased in India because energy prices globally have risen on the back of supply concerns following Russia's invasion of Ukraine and demand returning after being hit by the pandemic. India is 85 percent dependent on imports to meet its oil needs.

While oil prices have eased from a near 14-year high of USD 140 per barrel, it continues to trade above USD 100. On May 16, Brent - the world's most used benchmark - was trading at USD 109.76 per barrel. To compound things, the rupee has depreciated against the US dollar, making imports costlier. It closed at an all-time low of 77.55 a US dollar on May 13. Forex markets were closed on Monday on the account of Buddha Purnima.

Jet fuel, which makes up for almost 40 percent of the running cost of an airline, has this year surged to new highs. ATF prices have increased every fortnight since the start of 2022. In the nine hikes beginning January 1, ATF prices have been increased by Rs 49,017.8 per kl (Rs 49 per litre) or nearly 55 percent. 

(With inputs from PTI)