Government shields domestic airlines amid jet fuel price doubling

Government shields domestic airlines amid jet fuel price doubling

The Indian government has intervened to shield domestic airlines from a steep increase in jet fuel prices.

The state-owned Indian Oil Corporation had hiked aviation turbine fuel (ATF) prices in Delhi to ₹2.07 lakh per kilolitre for April, but later reduced it to ₹1.04 lakh/kl. This is still an increase of 8.58%.

The increase was due to global energy supply constraints amid the Middle East conflict, particularly affecting the Strait of Hormuz.

Partial increase in domestic ticket prices

The government has decided to allow only a partial increase in domestic ticket prices, limiting the hike to around 25% or ₹15 per kiloliter.

This is aimed at shielding airfares from sharp hikes while keeping the aviation sector stable.

However, airlines operating international routes will have to bear the full increase as per global market-linked pricing.

Aviation minister on benefits of approach

Aviation Minister Ram Mohan Naidu said this approach will help protect passengers and the aviation sector.

He said, "This calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, and support the continued stability of the aviation sector at this crucial juncture."

The US-Israel war on Iran has disrupted global energy markets, leading to a near-total closure of the Strait of Hormuz.

ATF prices in Delhi were hiked by ₹110,703.08 per kl

The government has assured that domestic airlines will not have to bear the full brunt of the steep increase in ATF prices.

The Ministry of Petroleum and Natural Gas confirmed that only a partial, staggered increase has been passed on to airlines.

This decision comes as commercial LPG rates were also hiked by ₹195.50 per cylinder due to rising global oil prices linked to the West Asia conflict, PTI reported.

Airlines already facing increased fuel consumption due to longer routes

The ATF price in Delhi was hiked by ₹110,703.08 per kilolitre, or 114.5%, to ₹207,341.22 per kl.

This is the first time ATF prices have crossed the ₹2 lakh per kl mark. The previous peak was in 2022 after Russia's invasion of Ukraine caused oil prices to spike.

The rising costs are expected to further strain airlines already facing increased fuel consumption due to longer routes necessitated by airspace closures from ongoing conflicts.