Travelling overseas through foreign airlines is set to get costlier after the government on Wednesday announced an increase of over 100 percent in the prices of aviation turbine fuel (ATF).
While the government has shielded Indian airlines from the steep rise, passing on just a quarter of the total increase, international airline companies operating in India will have to bear the full burden of the hike.
This means that foreign airlines operating flights to and from Indian cities will raise ticket prices to pass on the increase to passengers.
ATF rates in Delhi have been raised by Rs 110,703.08 per kilolitre, or 114.5 percent, to Rs 207,341.22 per kilolitre. While domestic airline companies like IndiGo and Air India will have to bear only Rs 15,000 per kilolitre of the burden, foreign airlines will face the full burden of Rs 110,703.08 per kilolitre.
“In order to insulate domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies of the Ministry of Petroleum, in consultation with the Ministry of Civil Aviation, have passed only a partial and staggered increase of 25% (only Rs 15/litre) to the airlines. Foreign routes will pay the full increase in ATF prices, consistent with what they pay in other parts of the world,” the oil ministry said in a post on X (formerly Twitter).
While the government has tried to guard the competitiveness of domestic airlines, it will lead to customers paying significantly higher ticket prices if they choose foreign airlines.
The decision is significant as fuel accounts for nearly 35–40 percent of an airline’s operating costs.
A sharp and uniform increase in ATF prices could have severely impacted domestic carriers, many of which are still recovering from pandemic-era losses and balance sheet stress.
The move could lead to higher ticket prices on international routes operated by foreign airlines.
This may, in turn, provide a competitive edge to Indian carriers on certain routes, particularly where both domestic and foreign players operate.
