On Wednesday, oil marketing companies raised ATF prices by 5.2%. The fourth hike in ATF prices hit a record high in less than two months.
Furthermore, India currently has some of the world’s highest taxation rates on the ATF. Moreover, jet fuel prices raised to Rs 90,519.79 per kilolitre from Rs. 86,038.16 per kilolitre.
Air Travel gets costlier
The ATF hike impacts aviation companies’ finances under large debts and tremendous stress.
Currently, over 30% of the total operating cost of an airline accounts for fuel-based expenses.
Furthermore, the industry is pressurizing the Centre to include the fuel type in the bounds of GST. However, ‘Bunker Diesel’ used in the shipping sector is included in the ambit of GST.
Moreover, in the Union Budget 2022, Aviation fuel prices were raised by 8.5%.
ATF fuel prices across India
As per the average price of the international benchmark in the previous fortnight, jet fuel prices change every month on the 1st and 16th.
Nevertheless, petrol and diesel prices remain unchanged despite a sharp rise in international crude oil prices.
However, in Mumbai, jet fuel prices hiked to ₹88,987.20 per kilolitre and halted at ₹94,888.70 per kilolitre in Kolkata.
As per a price report of state-owned fuel retailers, ATF prices in Delhi soared by ₹4,481.63 kilolitres or 5.2% to ₹90,519.79 per kilolitre.
India’s domestic air traffic
Despite the third wave of the Omicron variant peaking across the country last month, India’s domestic air traffic soared nearly by half in January, as reported by Fortune India earlier this month.
As stated by a report by rating and research firm ICRA, the domestic passenger traffic dipped by 43% to an estimated 64 lakh in January 2022 compared with 112 lakh in December 2021.
The drop is estimated to be nearly 17%, and capacity deployment by airlines was around 7% in January 2022, lower than January 2021.
However, the Ministry of Civil Aviation had allowed 100% capacity deployment on domestic routes from October 18, 2021.
As ATF fuel prices increase, it threatens to hinder the slow recovery of airlines witnessed during the third quarter of the continuing financial year.