Aviation fuel prices cut by 2.2%, only second reduction this year

Updated on Jul 16, 2022 12:00 PM IST

On average, jet fuel makes up nearly 40 per cent of a commercial airline's operating cost, meaning any significant increase will almost certainly increase fares.

(Representational, Credit: Reuters)
(Representational, Credit: Reuters)

Aviation Turbine Fuel (ATF) prices were reduced by 2.2 per cent Saturday, reflecting a fall in international oil prices. Oil marketing companies, or OMCs, cut ATF, or fuel used in aircraft and helicopters, prices by 3,084.94 per kilolitre to 1,38,147.93 per kl - per a notification by state-run retailers.

This is only the second time this year that rates have been reduced; prices peaked last month at 1,41,232.87 per kl. ATF prices are normally revised on the 1st and 16th of every month, based on benchmark international oil prices from the previous fortnight.

There was no change in July 1 rates. Before that, prices were hiked by a massive 16 per cent, news agency PTI reported.

On June 16, ATF prices increased by 19,757.13 per kl. On June 1, there was a marginal - 1.3 per cent cut in rates. That was the only exception in 2022, which has seen prices rise steadily.

Overall, ATF rates have been hiked 11 times since the start of this year, and had shot up by an eye-watering 91 per cent, or 67,210.46 per kl, since January.

Impact of ATF price rise

On average, jet fuel makes up nearly 40 per cent of a commercial airline's operating cost, meaning any significant increase will almost certainly increase fares.

The 2.2 per cent reduction announced today, if translated into a drop in fares, will offer marginal relief to air passengers.

Domestic airlines flying overseas do not pay excise duty on ATF - which brings them at par with international carriers - but do for flights within the country at a rate of 11 per cent.

Petrol, diesel prices

Meanwhile, petrol and diesel prices remain unchanged - at 96.72 per litre and 89.62 a litre, respectively. Excise duty cut helped reduce petrol prices by 8.69 a litre and diesel by 7.05 per litre on May 22.

The base price, though, has remained unchanged since April 6, PTI said.

Prior to that, prices of each had risen by a record 10 per litre.

Global oil prices

Oil gained 2.5 per cent Friday after a US official told Reuters an immediate output boost from Saudi Arabia is not expected.

This comes as investors question if OPEC, or Organization of the Petroleum Exporting Countries, has room to significantly ramp up crude production.

With input from PTI, Reuters

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