In a move that will further burden airlines already grappling with financial challenges, jet fuel prices in India have been hiked by 5% for the fourth consecutive month. This increase adds to the mounting operational costs for airlines, with jet fuel accounting for a substantial 40% of their overall expenses. Simultaneously, the cost of commercial cooking gas (LPG) has been raised by a substantial Rs 209 per 19-kg cylinder, aligning with the upward trajectory of international benchmarks.
Jet fuel, also known as aviation turbine fuel (ATF), witnessed a 5% price hike in India, marking the fourth consecutive monthly increase since July. Additionally, commercial cooking gas (LPG) rates have surged by a steep Rs 209 per 19-kg cylinder. These adjustments reflect the trends observed in international benchmarks and will have significant implications for various sectors of the Indian economy.
However, it’s important to note that the price of domestic LPG, primarily used in household kitchens for cooking purposes, remains unchanged and stands at Rs 903 per 14.2-kg cylinder.
The price of aviation turbine fuel (ATF) saw an increase of Rs 5,779.84 per kilolitre, equivalent to 5.1%, in the national capital, raising the cost to Rs 118,199.17 per kilolitre from the previous Rs 112,419.33. This change is in line with the price notification issued by state-owned fuel retailers. Notably, this is the fourth consecutive price hike for ATF, with the steepest-ever increase of 14.1% (amounting to Rs 13,911.07 per kilolitre) implemented on September 1, and an 8.5% increase (equivalent to Rs 7,728.38 per kilolitre) imposed on August 1.
This continuous rise in jet fuel prices, which represents a significant portion (40%) of an airline’s operating costs, places additional financial strain on an industry that is already grappling with various economic challenges. Notably, on July 1, the ATF price had increased by 1.65% (Rs 1,476.79 per kilolitre). In total, the four consecutive increases have led to a record rise of Rs 29,391.08 per kilolitre in ATF prices.
In addition to the jet fuel price hike, oil companies have raised the price of commercial LPG, which is commonly used in establishments such as hotels and restaurants. This increase amounts to Rs 209 per cylinder. Consequently, a 19-kg commercial LPG cylinder will now cost Rs 1,731.50 in the national capital and Rs 1,684 in Mumbai. This adjustment essentially reverses most of the Rs 157.5 per cylinder reduction in commercial LPG prices that had been implemented on September 1, along with an earlier Rs 100 reduction that was introduced on August 1.
The increase in Saudi contract prices (CP), a benchmark used to determine LPG prices, is attributed to the upward trend in crude oil prices observed over the past few weeks, which has raised concerns about supply constraints. Oil companies, having reduced domestic LPG rates by Rs 200 per 14.2-kg cylinder on August 30, opted to keep the price of 14.2-kg cylinders unchanged.
It’s worth noting that state-owned oil corporations, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), revise cooking gas and ATF prices on the first day of each month based on the average international prices from the previous month.
Meanwhile, petrol and diesel prices remain unchanged for an unprecedented 18th consecutive month. Petrol is priced at Rs 96.72 per litre in the national capital, while diesel stands at Rs 89.62 per litre. State-owned fuel retailers are technically expected to adjust petrol and diesel prices on a daily basis, relying on a 15-day rolling average of international fuel prices as a benchmark. However, they have not made any adjustments since April 6, 2022, effectively maintaining a freeze on these fuel rates.
