ATF prices hiked by 8% over last month as global crude oil prices rise
Oil marketing companies (OMCs) on Tuesday hiked aviation turbine fuel (ATF) prices by about 8% over last month as global crude oil prices firmed on improved demand.
ATF or Jet fuel prices have risen about 18% since 1 January.
ATF prices, which are revised every 15 days, stood at Rs60,261.16 per kilolitre (kl) in New Delhi on 16 March, up from Rs50,978.78 per kl on 1 January, and Rs59,400.91 per kl on 1 March, according to Indian Oil Corp. Ltd.
Jet fuel accounts for about a fourth of expenses for major domestic airlines. The rising fuel prices, along with a dip in domestic air passenger traffic numbers due to fresh spurt in coronavirus infections, and the resulting travel restrictions by some states pose challenges to recovery in the aviation sector.
ATF prices, which have been on a rise since October, were earlier increased to Rs55,737.91 per kl in New Delhi on 16 February from Rs53,795 per kl on 1 February.
As of Tuesday, ATF prices in Mumbai stood at Rs58,366.02 per kl, in Chennai it was at Rs61,503.43 per kl and in Kolkata it was at Rs64,633.56 per kl.
According to data from credit rating agency Icra, ATF prices have increased sequentially by 24.1% in July 2020 and by 4.2% in August 2020, before it declined sequentially by 3.4% in September 2020 and by 5.6% in October 2020, and eventually rising again by 4.6% in November 2020, 9.1% in December 2020, 10.2% in January 2021, and 5.4% in February 2021 (as on 1 February 2021).
The price of Brent crude stood at $68.27 a barrel on Tuesday, a rise by 127% on an annual basis, according to Bloomberg data.
A continuous rise in jet fuel price is set to bring up costs for airlines, which are currently struggling financially due to the pandemic.
“The government should consider urgently bringing petroleum products and jet fuel under the GST (goods and services tax) regime,” said a senior airline official, who spoke on the condition of anonymity.
“As things stand, jet fuel prices in India are highly taxed and prevent our airlines from being competitive with some of the global carriers ,” the official added.
