State-run refiners increased the jet fuel prices on Friday adding more worries to the Indian carriers struggling to reboot operations after extensive disruptions due to the fresh wave of pandemic.
The move is expected to make air travel more expensive, further impacting demand.
In the National capital, ATF prices for domestic airlines increased by 2.44 per cent from Rs 68,262.35 per kilo litre on July 1 to Rs 69,857.97 on July 16.
In Mumbai, ATF rose from a level of Rs 66,482.90 per Kl to Rs 68,064.65 per Kl on Friday.
Any increase in jet fuel prices by state-run refiners swells 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, the flurry of price increases may further stress the balance sheets of airlines who are making desperate efforts to stay afloat.
ATF prices have risen close to 40 per cent since January this year from a level of just around Rs 50,000 per Kl at the beginning of the year to over Rs 70,000 per Kl now.
Though airlines have the option of buying ATF abroad, with curtailed international operation, this option has limited benefits. And with passenger demand staying tepid amid the pandemic, it is difficult for airlines to pass on the entire cost increase to passengers.
An official of a budget carrier said that rising and the uncertain demand scenario will make airlines conservative on expanding capacity, especially on routes which have low demand.