Aviation fuel price slashed over 11 per cent, to cost less than diesel

State-run oil marketing companies have cut Aviation Turbine Fuel (ATF) or jet fuel prices by 11.3 per cent on Sunday, making it cheaper than diesel and bringing some relief to airlines struggling with high operating costs.

The price of jet fuel from midnight of 31 January has been reduced to Rs 46,513.02 a kilolitre in Delhi from 52,423 a kilolitre, a reduction of Rs 5,909.9 per kilolitre, the Indian Oil Corp (IOC) announced yesterday.

ATF price is now Rs 46.51 per litre which is about 10 per cent cheaper than diesel which is sold at Rs 51.52 in Delhi.

On 1 January, the ATF price was reduced by 12.5 per cent or Rs 7,520.52 per kilolitre, when it became cheaper than petrol by costing Rs 52.42 a litre while petrol was sold at Rs 58.91 a litre.

Since August, the price of ATF has come down by around 34 per cent in seven consecutive price revisions by oil companies on the back of falling oil prices.

Last week, international oil prices have reached their near six-year lows, but recovered slightly on Friday to end at around $52 a barrel for Brent crude, which is about 55 per cent below its June highs of $115 a barrel.

Usually, jet fuel is costlier compared to auto fuels due to its higher octane content and is a heavier fraction in the refining process. However, in India, it has been reversed as a result of a series of excise duty hikes in the last few months.

Fuel cost accounts for over 40 per cent of an airline's operating costs and the significant drop in the cost of jet fuel would help struggling carriers to improve their operating margins.

Although petrol and diesel prices have not been changed in this fortnightly revision, the oil companies have cut the cost of non-subsidised domestic LPG cylinder by Rs 103.50 per to Rs 605 per 14.2 kg cylinder in Delhi.

Previously, the price on non-subsidised LPG was cut by Rs 43.50 on 1 January.

Customers buy non-subsidised LPG after exhausting their subsidised annual quota of 12 cylinders.

Oil retailers IOC, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) revise periodically the fuel and LPG prices based on average import cost and rupee-dollar exchange rates.