Airfare May Get Cheaper as Jet Fuel Prices Drop to ₹110/Litre

Air travel in India will soon be cheaper due to a rapid reduction in Aviation Turbine Fuel (ATF) prices. The new price has brought the jet fuel down to ₹110 per litre in Delhi, down ₹5 from the previous rate. Thanks to ATF accounting for almost 35-40% of airline operating costs, this will reduce costs for carriers and ticket prices for passengers.

The price cut comes at a time when global crude oil prices have moderated after geopolitical tensions in West Asia subsided. Brent crude is now at $73 per barrel, down from earlier highs. This has made it possible for Indian oil marketing companies to pass on the benefits to airlines, and to relieve them of much-needed operational costs.

For airlines, the reduction in ATF prices is welcome. Fuel remains the single biggest component of their expenditure, and any decrease directly improves margins. Carriers may be able to lower fares or eliminate fuel surcharges, but actual ticket prices will still depend on seasonal demand, competition, and route economics.

The government has also updated export duties on petroleum products on top of the ATF cut. Petrol exports carry a duty of ₹4 per litre, diesel ₹6.5 per litre, and ATF ₹7.5 per litre. Meanwhile, the domestic excise duties are the same and the retail petrol and diesel prices remain unchanged. In addition, the price of a 19-kg commercial LPG cylinder has been reduced by ₹183.50, which is good news for businesses, and domestic LPG rates are also unchanged.

The cut will also translate to lower airfares for passengers who see it as a good thing in times of off-peak demand. If airlines are going to make money at the beginning and will still have a price to pay for flying, passengers are supposed to see a price rise as a result of airlines going on a price war where they have to find a middle ground between profitability and competitive rates.

The price cuts in jet fuel to ₹110 per litre are a large boost for India’s aviation industry. With low operating costs, airlines are more likely to offer affordable fares of air travel, which is good for the economy. With crude prices falling around the world stabilizing, and as global oil prices stabilize, the sector will have a better prospect in the coming months, and airlines and passengers are better placed to enjoy that too, so the next few months of the year will be better for the sector.