Jet fuel prices see marginal cut from record high as crude oil falls

New Delhi: Oil marketing companies have cut aviation turbine fuel (ATF) prices by 2.2% for this month as crude oil declined marginally in the past few days. Jet fuel prices were cut by Rs 3,084.9 per kiloliter (kL or 1,000 litres) to Rs 1,38,147.9 per kilolitre, making it only the second reduction in a row this year.
ATF for domestic flights is the costliest in India for two reasons – high base prices by oil marketing companies who are not able to raise the prices of politically sensitive petrol, diesel and LPG and thus see a disproportionate rise in jet fuel . And then high central and state taxes on the base price makes ATF very expensive. Improvements in air traffic have stalled due to the high cost of flying, forcing airlines to increase airfares.
Struggling to survive, Indian carriers have long been requesting a reduction in excise duty on jet fuel and also that jet fuel be brought under the GST so that they can benefit from input tax credit. ATF prices have increased by over 120 per cent since June 2021. What has added to the airlines’ burden is a weak rupee as most of the costs such as lease rentals and maintenance contracts are dollar-denominated.
On Friday, Union Petroleum and Aviation Ministers met to discuss some relief to Indian carriers on the fuel front. “I thank my senior colleague, the Petroleum Minister” Hardeep Singh PuriTo meet us with an advisory group of oil marketing companies and airlines. We are confident that we will work together to resolve the air turbine fuel issues facing the aviation sector,” Aviation Minister JM Scindia tweeted on Friday. Incidentally, Puri was aviation minister before Scindia and is aware of the ATF crisis facing Indian airlines.
The ATF prices are revised on 1st and 16th of every month based on the rates of benchmark international oil rates in the previous fortnight. Barring two minor cuts, ATF prices have been rising throughout 2022. Overall, the rates have increased 11-fold since the beginning of the year. This has almost doubled the rates in six months.

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