Aviation turbine fuel (ATF) price was increased by 2 percent or Rs 2,258.54 per kilolitre to an all-time high of Rs 1,12,924.83 per kilolitre in the national capital. While prices in Kolkata, Mumbai, and Chennai rose to Rs 1,17,353.71, Rs. 1,11,690.61 and Rs. 116,583.71 per kilolitre, respectively. This is the seventh hike since January 2022 amid a surge in global energy prices.
ATF prices are revised on every 1st and 16th of the month and differ across states because of varying value-added taxes. The recent hike comes after the steepest ever hike of 18.3 percent (Rs 17,135.63 per kilolitre) on March 16. Some airlines had then indicated a hike in airfare.
The cause of the hike is the continuous climb in global energy prices amid the Ukraine crisis and supply concerns. Brent crude was trading at $105 on Friday which is up by 65 percent on an annual basis.
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Airlines have been urging the government to bring jet fuel under the ambit of the goods and services tax as it will provide airlines relief and the benefit of input tax credit. “The high taxes on jet fuel will need to be relooked," a senior airline official told Livemint, requesting anonymity.
However, airlines may find it difficult to pass on the entire cost of the hike to passengers without impacting demand. The positive is that so far, the market has not seen a major impact despite high airfares, the official added.
Jet fuel makes up 30-40 percent of the cost of running an airline in India and these price hikes will further crimp profit margins of airlines which have already suffered huge losses over the last few quarters during the pandemic.
However, domestic air traffic is witnessing a surge in demand in recent weeks with a decline in active cases of Covid in the country.
First Published: Apr 2, 2022 5:07 PM IST
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