ATF Prices Cut By Around ₹5 Per Litre As Softer Crude Offers Relief To Airlines

State-owned oil marketing companies (OMCs) have reduced aviation turbine fuel (ATF) prices by around ₹5 per litre with effect from July 1, offering relief to domestic airlines after fuel costs climbed sharply during the recent conflict in West Asia.

According to PTI, the revised price of ATF in Delhi is around ₹110 per litre. The latest reduction comes after jet fuel rates had touched record highs as global crude oil prices surged amid geopolitical tensions.

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Fuel is among the biggest cost components of airline operations; therefore, any changes in the price of fuel will affect the cost of operations in any significant manner.

Relaxation in Crude Prices Leads to a Drop

The recent reduction comes after a drop in the price of international crude oil following some calm in the West Asian region. The price of global oil had gone up drastically due to the war between Iran and Israel. However, crude prices have softened in recent weeks after the U.S. and Iran agreed to a ceasefire, easing concerns over supply disruptions in global energy markets.

The correction in international crude prices has enabled OMCs to reduce aviation fuel rates after consecutive increases in recent months.

Government Revises Export Duties

Separately, the Centre revised export duties on petrol, diesel and aviation turbine fuel for the fortnight beginning July 1.

The revised duty structure applies only to fuel exports. Excise duty on petrol and diesel sold in the domestic market remains unchanged, ensuring there is no immediate impact on retail fuel prices for consumers.

The government periodically reviews export duties based on movements in international oil prices and prevailing refining margins.

Fuel Costs Remain Key For Airlines

Fuel forms a significant portion of the cost structure of an airline company, and changes in ATF rates affect the bottom line of the company. Even though the latest decline helps, the prices of ATF are quite high relative to the prices that existed before the tensions rose in West Asia.

The past few months have been characterized by increased operational costs due to rising costs of aviation fuel along with crude oil. This recent correction will be expected to reduce input costs especially in the peak travel season.

The future adjustments will be subject to changes in global prices of crude oil, refinery charges and also the geopolitical issues surrounding energy markets.

Awaits Further Stability in Industry

This drop in ATF prices is a result of improved circumstances in the global oil market owing to reduced worries regarding supply. Though airlines will gain from the decline in fuel costs, the future movement of aviation fuel prices will depend on international crude benchmarks and further adjustments from oil marketing companies.

The domestic excise duties have not changed while the export duties have been readjusted since July 1.