'Only partial and staggered increase': Govt caps ATF hike for domestic airlines amid global fuel shock

The Ministry of Petroleum and Natural Gas on Wednesday, April 1, said it has limited the rise in Aviation Turbine Fuel (ATF) prices for domestic airlines to cushion travel costs, even as global energy markets push rates sharply higher.

In a post on X, the Ministry said ATF prices, which were deregulated in 2001 and revised monthly based on international benchmarks, were expected to jump by more than 100 per cent on April 1 due to the closure of the Strait of Hormuz and an extraordinary surge in global oil prices.

“To insulate domestic travel costs from the substantial increase in international prices, PSU oil marketing companies, in consultation with the Ministry of Civil Aviation, have passed only a partial and staggered increase of 25 per cent (about Rs 15 per litre) to airlines. Foreign routes will bear the full increase in ATF prices,” it said.

Reflecting the global spike, ATF prices were more than doubled to a record Rs 2.07 lakh per kilolitre on Wednesday. However, domestic airlines will face an effective increase of about 8.5 per cent, significantly lower than the headline jump.

Other carriers, including non-scheduled, adhoc and charter operators, will pay the full market rate. For them, prices have risen by Rs 1,10,703.08 per kilolitre, or 114.5 per cent, to Rs 2,07,341.22 per kilolitre.

Industry sources, according to PTI, said that the calibrated approach was adopted as the war in West Asia disrupted energy supply chains and drove global oil prices up by nearly 50 per cent. While foreign airlines and non-domestic operators will pay benchmark-linked prices, domestic carriers have been shielded from the steepest increase.

This is the first time ATF prices have crossed the Rs 2 lakh per kilolitre mark. The previous peak was recorded in 2022, when rates climbed to around Rs 1.1 lakh per kilolitre following the Russia-Ukraine conflict.

The latest revision also marks the second consecutive monthly increase. On March 1, ATF prices were raised by 5.7 per cent (Rs 5,244.75 per kilolitre).

Higher fuel costs are expected to further strain airlines, which are already burning more fuel on longer routes to western destinations due to airspace closures linked to the conflict. Fuel typically accounts for around 40 per cent of an airline’s operating costs.

Alongside, commercial LPG prices — used by hotels and restaurants — were hiked by Rs 195.50 per 19-kg cylinder in line with global trends. A cylinder now costs Rs 2,078.50 in Delhi. This follows a Rs 114.5 increase on March 1.

However, domestic cooking gas LPG prices remain unchanged at Rs 913 per 14.2-kg cylinder in Delhi. Rates were last revised on March 7, when they were increased by Rs 60.

State-run fuel retailers — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum — revise ATF and LPG prices on the first day of every month based on international benchmarks and exchange rates.

Meanwhile, petrol and diesel prices remain unchanged following a Rs 2 per litre cut last March. In Delhi, petrol is priced at Rs 94.72 per litre and diesel at Rs 87.62 per litre.