ATF Price Hike Raises Airline Costs, Commercial LPG Cylinder Gets Costlier
Aviation turbine fuel (ATF) prices have increased sharply from October 1, adding to the operating expenses of domestic airlines. According to state-owned oil marketing companies, jet fuel prices have risen by around Rs 16 per litre. At the same time, the price of a 19-kg commercial LPG cylinder has been increased by Rs 62.59.
The latest monthly revision comes amid changes in international fuel benchmarks and fluctuations in the rupee-dollar exchange rate.
For domestic airlines, the price of aviation fuel has increased from approximately Rs 121 per litre to around Rs 137 per litre. This represents a rise of nearly Rs 16 per litre compared with the previous month.
The latest increase follows two successive monthly hikes. In September, ATF prices rose by Rs 6.28 per litre, or 5.46 per cent.
Since jet fuel makes up a significant share of airline operating expenses, continued increases can put additional pressure on carriers. However, the effect differs from one airline to another depending on factors such as fuel consumption, flight routes, aircraft efficiency and other operating costs.
Could Airfares Increase?Fuel typically accounts for around 35-40 per cent of an airline’s operating expenditure in India, making ATF prices an important factor in the cost of running flights.
An increase in jet fuel prices raises the operating costs of airlines and can eventually put pressure on airfares. However, ticket prices are not determined by fuel costs alone. Passenger demand, competition between airlines and the availability of seats also influence the final price of air tickets.
Commercial LPG Cylinder Gets Rs 62.59 CostlierCommercial LPG prices have also been revised upward from October 1. The price of a 19-kg commercial LPG cylinder has increased by Rs 62.59.
This follows a relatively smaller increase of Rs 9.50 per cylinder in September. Before the recent increases, commercial LPG prices had fallen significantly for two consecutive months. The price was reduced by Rs 192 per 19-kg cylinder in August after a reduction of Rs 183.50 in July.
Commercial LPG prices had seen a major increase earlier this year. Between February and June, the price of a 19-kg cylinder climbed by Rs 1,373, rising from Rs 1,740.50 to a record Rs 3,113.50.
Prices then declined in July and August before beginning to move higher again in September.
Why Are ATF and LPG Prices Changing?ATF and LPG prices are revised at the beginning of each month. The changes are influenced by international benchmark prices and movements in the rupee’s exchange rate against the US dollar.
State-level taxes, including VAT, can also affect the final price of fuel and LPG.
While commercial LPG has become more expensive, there has been no change in the price of domestic cooking gas. A 14.2-kg household LPG cylinder continues to cost Rs 942.
Domestic LPG prices had increased by Rs 89 per cylinder between March and June following disruptions in energy supplies and higher international energy prices associated with the West Asia crisis.
Petrol and diesel prices have also remained unchanged. Both fuels were increased by around Rs 7.50 per litre in May but have not been revised since then.
The latest monthly revision therefore mainly affects airlines through higher ATF costs and commercial LPG users, while domestic LPG, petrol and diesel prices remain unchanged.
DisclaimerFuel and LPG prices are subject to periodic revisions and may vary by location because of taxes and other applicable charges.