ATF Price Hike: Indian Oil Corporation has raised the price of Aviation Turbine Fuel (ATF) by Rs 5 per liter. Consequently, the cost of ATF for domestic airlines has increased from Rs 110 per liter to Rs 115 per liter. This hike will elevate fuel expenses for domestic airlines. Since turbine fuel constitutes 40 percent of an airline’s overall operating costs, even a minor increase in this price can lead to a significant rise in expenses. As a result, there is a heightened likelihood of airfares increasing. However, it’s important to note that fares are influenced by various factors, not just ATF prices.
Aviation turbine fuel is a specialized fuel used for powering aircraft. The ongoing tensions in West Asia have led to a notable rise in crude oil prices, which in turn has made ATF more costly, as it is derived from crude oil. Since ATF directly affects the operating costs of airlines, any fluctuations in ATF prices can impact both the stock prices of aviation companies and airfares.
On a different note, commercial cylinders are becoming more affordable
While the government has raised the price of ATF, it has simultaneously lowered the price of a 19-kilogram commercial LPG cylinder. As of today, the price of a 19-kilogram commercial LPG cylinder in Delhi has decreased by Rs 202, now costing Rs 2,728, down from Rs 2,930. In Kolkata, the price has dropped by Rs 209. In Patna, the cost of a commercial LPG cylinder has also been reduced by Rs 209, bringing it down to Rs 3,018 from Rs 3,227. In Lucknow, this cylinder will now be priced at Rs 2,860.50, down from Rs 3,052.50.
In the meantime, the cost of aviation turbine fuel has risen by Rs 5 per litre, bringing the price for domestic airlines to approximately Rs 115 per litre. ATF makes up about 35–40 percent of an airline’s operating costs, and this recent increase is likely to raise fuel expenses for carriers. However, the effect on airfares will vary based on market demand and the pricing strategies of airlines. These adjustments occur against a backdrop of changing global crude oil prices and persistent geopolitical events that are affecting international energy markets.