ATF prices raised for domestic airlines; earlier confusion over steep hike clarified

The price of aviation turbine fuel (ATF) for domestic scheduled airlines has been increased across metro cities effective April 1, though the hike is far more moderate than the sharp spike seen earlier in the day for non-scheduled operators.

In Delhi, ATF will now cost ₹1,04,927 per kilolitre (kL), up from ₹96,638.14 in March. Kolkata saw prices rise to ₹1,09,450 from ₹99,587.14, while in Mumbai rates increased to ₹98,247 from ₹90,451.87.

Chennai recorded one of the steepest metro hikes, with prices at ₹1,09,873 compared with ₹1,00,280.49 last month.

The revision translates to an increase of roughly 8-10% across metros on a month-on-month basis, continuing the upward trend seen since February amid firming global oil prices.

Earlier confusion over 115% spike

The Ministry of Petroleum and Natural Gas said ATF prices, deregulated since 2001 and linked to international benchmarks, were expected to rise by over 100% amid the closure of the Strait of Hormuz and extreme volatility in global energy markets.

However, to shield domestic travel costs, state-run oil marketing companies, in consultation with the Civil Aviation Ministry, implemented only a partial and staggered increase of about 25% (around ₹15 per litre) for domestic airlines, while international routes will bear the full increase.

The new price announcement came after confusion earlier in the day when ATF price lists published by IndianOil showed a more than 115% surge.

Airlines told CNBC-TV18 that those rates applied only to non-scheduled carriers and charters, not commercial domestic flights.

IndianOil later issued a clarification stating that the sharply higher rates were not applicable to scheduled domestic airlines.

Upward trend continues

Despite the clarification, the latest hike still adds to cost pressures for airlines.

Airline stocks InterGlobe Aviation and Spicejet are likely to remain under pressure as rising ATF costs squeeze margins, though any fare hikes or surcharges could offer partial relief.

ATF prices have been steadily rising over the past three months:

ATF price trend across metros (₹/kL)



Pressure on airfares, govt exploring options

The increase is expected to keep upward pressure on airfares, especially during peak travel periods, as fuel accounts for a significant portion of airline operating costs.

The Civil Aviation Ministry is exploring measures to contain the rise in ATF prices, including possible VAT cuts by states and discussions with oil marketing companies to cap refining margins (crack spreads), which have surged amid the ongoing West Asia crisis.

Civil Aviation Minister K Rammohan Naidu had earlier said India has adequate ATF supplies for about 60 days and does not foresee any disruption in production, even as global energy markets remain volatile.

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