Air travel may become costlier as jet fuel prices rise again

Government-run refineries on Friday increased the prices of jet fuel. This has raised concerns for Indian carriers struggling to resume operations after facing several disruptions due to the new wave of the pandemic. The move is expected to make air travel more expensive and impact demand.

ATF prices for domestic airlines in the national capital on Friday increased by 2.44 per cent from Rs 68,262.35 per kiloliter on July 1 to Rs 69,857.97 on July 16. In Mumbai too, the ATF has increased from Rs 66,482.90 per kl to Rs 68,064.65 per kl.

Any increase in jet fuel prices by government-run refineries pushes up the operating costs of Indian carriers.
Aviation Turbine Fuel (ATF) accounts for 35-50 per cent of the cost of running an airline in India. Moreover, this rapid increase in prices could put further pressure on the balance sheets of airlines which are striving hard to stay afloat in the industry.
Since January this year, ATF prices have touched close to 40 per cent, rising from just Rs 50,000 per kl at the beginning of the year to Rs 70,000 per kl now. Although airlines have the option to buy ATF from abroad, the benefits of this option are limited with the reduction in international operations. At the same time, due to the decrease in the number of passengers in this time of Corona, the airlines also do not have the option to recover the increase in cost from the passengers.