Jet fuel to cost even more

New Delhi: State – owned oil marketing companies are all set to revise upwards the price of aviation turbine fuel (ATF), or jet fuel around 1 July. Given that the average price of fuel in international markets has jumped $10, from $130 per barrel in May, to the present ballpark figure of $160 per barrel, a revision appears quite imminent.

Sources in the oil marketing companies (OMCs) say that a price hike is imminent, only the quantum remains to be decided. IOC is the leading supplier of ATF, and reports have indicated that the price of aviation turbine fuel could be raised to Rs2,500 per kilolitre on 1 July.

The trio of Indian Oil Corporation (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) OMCs review prices of aviation fuel on the first day each month, taking into account the average global prices in the previous month.

ATF is already priced 40 per cent higher than its international prices. This is seen as a major drain on airlines, and a large component in their ever-compounding losses.

Last month, airlines had hiked their fuel surcharges by Rs300 for short-haul, and Rs500 for long=haul routes. Thereafter, there was another round of increases on 19 June, when low cost carriers increased their fuel surcharges and full service airlines made their base fares more expensive.

From Rs10,839 per kilolitre, oil marketing companies had increased prices of jet fuel to Rs12,375 per kilolitre on 1June. Thereafter, prices were reduced by around Rs3,000.42 per kilolitre on 5 June, when the government halved the customs duty on the fuel from 10 per cent to 5 per cent.

Airlines are now looking to once again hike prices of tickets and/or fuel surcharges, if the price of jet fuel goes up any further. The only question to ponder for these companies would be the quantum of the hike that would be passed on to the end consumer.