Media365
Indian airlines received a much-needed breather on Wednesday after state-owned oil marketing companies (OMCs) cut aviation turbine fuel (ATF) prices by nearly Rs 5 per litre, tracking a decline in international crude oil prices as geopolitical tensions in West Asia eased.
The reduction, effective from July 1, lowers the price of jet fuel in Delhi to around Rs 110 per litre from about Rs 115 per litre, according to the latest price notification. The cut comes after ATF prices had surged to record highs last month amid fears of supply disruptions following the Iran-Israel conflict.
Fuel is the single-largest operating expense for airlines, accounting for up to 40 per cent of total costs. While the latest reduction is expected to improve operating margins for domestic carriers, any impact on passenger airfares is likely to depend on demand, competition, route economics and individual airline pricing strategies.
Relief after weeks of elevated fuel costs
The price cut follows a sharp correction in global crude oil markets after the United States brokered a ceasefire between Iran and Israel, easing concerns over disruptions to oil supplies from one of the world’s most important energy-producing regions.
International benchmark crude prices had climbed sharply during the conflict, pushing up aviation fuel costs worldwide. As oil prices retreated in recent weeks, Indian OMCs passed on part of the benefit through lower ATF prices in their monthly revision.
ATF prices are revised on the first day of every month based on the average international benchmark prices and the prevailing rupee-dollar exchange rate.
For Indian airlines, which have grappled with volatile fuel prices and rising operational costs in recent months, the latest reduction is expected to provide some respite during the peak travel season.
Commercial LPG also becomes cheaper
The ATF price reduction comes on the same day OMCs announced
a cut of Rs 183.50 in the price of a 19-kg commercial LPG cylinder, marking the first reduction in commercial LPG rates this year.
The cut offers relief to restaurants, hotels and other commercial establishments that rely heavily on LPG. However, the price of the 14.2-kg domestic LPG cylinder remains unchanged, meaning households will not benefit from the latest revision.
Both revisions reflect the moderation in global energy prices after weeks of heightened volatility.
Government revises export duties
Separately, the Centre on Tuesday revised export duties on petrol, diesel and aviation turbine fuel for the fortnight beginning July 1 while leaving excise duties on petrol and diesel sold in the domestic market unchanged.
Under the revised rates, export duty has been fixed at Rs 4 per litre on petrol, Rs 8.5 per litre on diesel and Rs 7.5 per litre on ATF.
The fortnightly review forms part of the government’s mechanism to align export levies with movements in international crude oil and refined fuel prices. The policy is intended to discourage excessive exports during periods of elevated global prices while ensuring adequate domestic availability of petroleum products.
The latest notification also widened exemptions from export duties for shipments by state-run oil companies to Mauritius and the Maldives, in addition to Nepal, Bhutan, Bangladesh and Sri Lanka.
The changes do not affect excise duty or retail prices of petrol and diesel sold within India, which remain unchanged.
