Air fares may go up as oil marketing companies hike ATF prices by 10%

NEW DELHI: Flying is set to get more expensive, with oil marketing companies Tuesday increasing aviation turbine fuel (ATF) prices by 10% under the new price-stabilisation regime. ATF prices will remain frozen at this level for three years under the new regime. Jet fuel for domestic carriers will now cost Rs 115 per litre, up from Rs 105 per litre. Air fares may go up as oil marketing companies hike ATF prices by 10% | page 15
New Delhi: Flying is set to get more expensive, with oil marketing companies on Tuesday increasing aviation turbine fuel (ATF) prices by around 10% under the new price-stabilisation regime.

The only relief is that ATF — which accounts for 60% of an airline’s operating costs — will remain frozen at this level for the next three years for domestic and international flights of Indian carriers that opt for the new mechanism.





Jet fuel for domestic carriers will now cost Rs 115 per litre, up from Rs 105 per litre.

Apart from higher operating costs due to the rupee’s fall and fuel price rise, airfares are under pressure due to airlines cutting flights on account of softening demand. The price-stabilisation mechanism is aimed at shielding airlines and passengers from sharp swings in global oil prices.

Govt had announced the “price stabilisation support” mechanism last week. The Rs 10,000-crore scheme, however, will be optional. Carriers that do not opt for it will continue to pay market-linked prices, currently around Rs 142 per litre, similar to international airlines.

Last week, Rohit Raj, director in the ministry of civil aviation, had said the benchmark price had been fixed as a one-time arrangement for three years. Under the scheme, govt will provide budgetary support in the form of an interest-free advance to oil marketing companies to compensate them for not passing on higher fuel costs to Indian carriers during periods of price spike.


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