The aviation turbine fuel (ATF) prices took a high jump in India as the oil marketing companies announced a record-breaking 115% hike on Wednesday, taking the prices above Rs2 lakh per kilo litre mark. However, the domestic flyers have been shielded from the full brunt of the surge as the Ministry of Petroleum and Natural Gas capped the price increase at 25%, leading to airlines like IndiGo revising their fuel surcharges.
Domestic Routes See Mild 8.5% to 9.5% Surge Across Key Metro Cities
The Indian aviation industry was awaiting the first of April, expecting a massive surge in ATF prices, in line with the global surge in pricing. While the prices announced by the Indian public sector undertaking oil companies revealed over 100% hike, the prices for domestic routes saw only a mild surge. The Indian Oil Corporation Ltd (IOCL) initially announced equal surge for both domestic as well as international carriers but later revised the prices.
The ATF price for domestic routes for the month of April saw a minor surge from 8.5% to 9.5% across the four key metro cities. IOCL's ATF price in Delhi went up to Rs1.04 lakh, Mumbai continued to have the cheapest ATF at Rs98,247 while Kolkata and Chennai have the costliest ATF at Rs1.09 lakh. On the other hand, ATF price for international routes and charter aircrafts saw as high as 115% jump, taking the price above Rs2 lakh-mark for the first time.
Split Pricing Creates Stark Divide Between Domestic and International Carriers
Initially, the triple-digit hike appeared set to apply across the board but following consultations with the petroleum and the civil aviation ministry, OMCs implemented a partial and staggered increase for domestic scheduled carriers. The split pricing has created a stark divide in the industry as domestic flyers are spared from astronomical fare hikes while international routes and non-scheduled operators will now bear the full weight of market-aligned global prices.
Union civil aviation minister Ram Mohan Naidu Kinjarapu said, “This calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, and support the continued stability of the aviation sector at this crucial juncture. It will also benefit the broader economy by ensuring the smooth movement of cargo and maintaining vital air connectivity for trade and logistics.”
Indian Airlines Welcome Decision, Call It Thoughtful and Timely Step
Indian airlines welcomed the decision of moderting ATF prices for domestic routes as thoughtful and timely step. Air India, IndiGo, Akasa Air as well as SpiceJet said that the move gave relief to the Indian carriers. “Their timely intervention will go a long way in helping airlines navigate one of the most challenging global crises in recent times, marked by severe external disruptions and volatility in fuel markets,” said SpiceJet's chairman and managing director Ajay Singh.
Following the revision in ATF prices, airlines also started revising their fuel surcharges for domestic and international routes. IndiGo, which had introduced fuel surcharge on domestic and international routes from March 14, revised it on Wednesday. The earlier flat Rs425 surcharge on domestic routes has now been bifurcated from Rs275 to Rs900 based on distance.
However, the surcharge for international routes saw the biggest hike, ranging from Rs900 for the destinations in the Indian subcontinent to Rs10,000 for UK and Europe routes. The airline claimed that it has passed on a relatively smaller amount to customers keeping in mind the consequential burden on them, although fully offsetting the fuel price increase would require substantial fare revisions.
