ATF Price Cut: State-owned Oil Marketing Companies on Wednesday reduced the price of aviation turbine fuel (ATF) supplied to domestic airlines by Rs 5 per litre, a move expected to provide some relief to carriers facing volatile fuel costs and could eventually help moderate airfares.
Following the revision, the effective ATF price for domestic airlines has been reduced to Rs 110 per litre from Rs 115 per litre.
On a bulk basis, the price has also been cut to Rs 1.10 lakh per kilolitre, down from Rs 1.15 lakh per kilolitre.
The reduction in prices came after state-owned oil marketing companies last month increased ATF prices for domestic airlines by around 10 per cent while introducing a fixed-rate pricing mechanism aimed at reducing fuel price volatility.
As per the mechanism, the government had set up a Rs 10,000 crore fund for ATF price stabilization regime which offered certainty to airlines over fuel costs by locking the ATF price for the next three years.
The latest cut comes amid continued fluctuations in global crude oil prices due to the ongoing conflict in West Asia.
Separately, the Centre has revised export duties on petrol, diesel and aviation turbine fuel with effect from July 1, while keeping excise duty on petrol and diesel sold in the domestic market unchanged.
In a separate move, Nayara Energy has announced a reduction in retail fuel prices across its network of more than 7,000 fuel stations from July 1. The company has cut petrol prices by Rs 5 per litre and diesel prices by Rs 3 per litre.
Commercial users have also received relief, with the price of 19-kg LPG cylinders reduced to Rs 2,930.
Aviation fuel accounts for one of the largest components of an airline’s operating costs. While the reduction in ATF prices is expected to ease cost pressures on domestic carriers, any reduction in airfares will depend on factors such as passenger demand, competition, route economics and overall operating expenses.
The latest revisions nevertheless provide some relief to both airlines and fuel consumers even as global energy markets remain volatile due to geopolitical tensions.
