Aviation turbine fuel (ATF) prices for domestic airlines have been increased by 5.46%, or Rs 6.28 per litre, taking the price from Rs 115 per litre to Rs 121.28 per litre, according to sources at Indian
Oil Corporation Ltd (IOCL). This is the second consecutive monthly increase in jet fuel prices, adding to cost pressures for domestic airlines and potentially putting upward pressure on airfares.
The latest hike follows a Rs 5 per litre increase on August 1, when ATF prices rose from Rs 110 per litre to Rs 115 per litre. In July, prices had been reduced by Rs 5 per litre.
Jet fuel is one of the largest operating expenses for airlines, accounting for around 35% to 40% of an airline’s total operating expenditure in India. The latest increase could therefore weigh on the cost structures of domestic carriers, particularly if elevated fuel prices persist.
Higher ATF prices can also influence airfares, although airlines do not automatically pass the entire increase on to passengers. Ticket prices are determined by several factors, including passenger demand, competition, route capacity and booking trends.
The latest ATF price increase comes amid a rise in global crude oil prices. Oil prices gained on Tuesday as the resumption of fighting between the US and Iran in the Middle East renewed fears of supply disruptions from the world’s key crude-producing region.
Brent crude futures were up 56 cents, or 0.6%, to $91.05 a barrel at 0044 GMT, while US West Texas Intermediate crude was up 83 cents, or 1%, to $86.59. In the previous session on Monday, Brent closed up 2.7%, at one point reaching its highest since August 25, and WTI settled up 2.8%, touching its highest since August 21.
On Monday, US President Donald Trump threatened further strikes against Iran following the first exchange of direct attacks between the countries in a month on Sunday, raising tensions in a conflict that had recently shifted into an economic standoff.
Crude prices remained volatile through August as markets reacted to stop-start efforts to end the conflict and US measures aimed at putting further economic pressure on Iran.
