Domestic Jet Fuel Prices Steady for June as International Rates See Downward Shift.

India’s Aviation Turbine Fuel (ATF) prices for domestic flights were maintained at current levels in the recent June revision, while a significant reduction of $400 per kilolitre was implemented for international operations. This decision, made by state-owned oil marketing companies, aims to alleviate financial pressures on airlines amid rising operational costs driven by increasing international crude oil prices. Additionally, the Central Government has intervened in the market by capping domestic ATF price hikes at 25% since April and supporting airlines through reduced value-added tax (VAT) on ATF by several state governments.

For the average citizen, these pricing decisions translate into mixed outcomes. On one hand, the unchanged domestic ATF prices prevent further escalation in airfares, which had already seen a considerable rise due to operational expenses. However, the recent increases in international average booking values (ABVs) from around ₹22,700 to over ₹32,600 may deter international travel plans for many. Domestic airfares have also seen a rise, albeit at a comparatively lower rate, from approximately ₹8,800 to ₹9,400, indicating that while immediate relief has been offered, the overall cost of air travel remains a burden for consumers.

Looking forward, the government and the Reserve Bank of India (RBI) are likely to continue monitoring the aviation sector closely, taking additional measures if high fuel costs persist. There are expectations of further adjustments to operational frameworks, possibly including additional relaxation of policies to stimulate demand, as well as ongoing collaboration with airlines to enhance flexibility in operations. The sustained high operational costs, compounded by rupee depreciation, warrant a strategic response to ensure the sector’s viability and growth, while balancing consumer affordability and airline profitability.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)