On Thursday, jet fuel prices were raised by 16%, the highest rates on record, to propel rates to a record high, alongside the tightening of international oil rates.
According to a price notification from state-owned fuel retailers.
The hike, which follows a marginal reduction of 1.3% (Rs 1,563.97 per kl) in the rate earlier this month, takes jet fuel prices to a record high across the country.
But for the one-time drop on June 1, ATF prices have increased throughout 2022. In total, prices have been increased 11 times since the start of the year. This led to rates that nearly doubled in six months.
Since January 1, prices have increased by 91% (67,210.46 rupees per kl).
The ATF price before the start of the rising price circle on Jan 1 was 74,022.41 rupees per kl and now it is 1,41,232.87 rupees.
With kerosene accounting for nearly 40% of an airline’s operating costs, rising prices will drive up the cost of flying and possibly result in higher fares.
SpiceJet airline chairman and chief executive Ajay Singh said fares could rise by at least 10-15%.
“Aviation turbine fuel prices have increased more than 120% since June 2021,” it said in a statement.
“This massive increase is not sustainable and governments, central and state, must take urgent action to reduce ATF taxes which are among the highest in the world,” he added.
For SpiceJet, jet fuel accounts for more than 50% of its operating costs, he said, adding that “the sharp increase in jet fuel prices and the depreciation of the rupee has left national airlines with no no choice but to raise tariffs immediately and we believe that a minimum 10-15% tariff increase is necessary to ensure operating costs are better supported.Rising jet fuel prices go hand in hand with the international oil prices firming Brent, the world’s most popular crude oil benchmark, traded on Thursday at $119.16 a barrel, the highest in nearly a decade.
ATF prices are revised on the 1st and 16th of each month on the basis of the average of the international reference rates.
Jet fuel in Mumbai now costs Rs 1,40,092.74 per kl, while it is priced at Rs 1,46,322.23 in Kolkata and Rs 1,46,215.85 in Chennai.
Rates differ from state to state, depending on the incidence of local taxation.
Meanwhile, petrol and diesel prices remained unchanged at Rs 96.72 per liter and Rs 89.62 per litre, respectively. A reduction in excise duty by the government had reduced the price of petrol by Rs 8.69 per liter and diesel by Rs 7.05 per liter on May 22. But for that, the base price has remained unchanged since April 6. Prior to that, prices had risen by a record Rs 10 per liter each.
Retail prices for gasoline, diesel and domestic cooking gas are well below cost.
Gasoline and diesel prices are revised daily, based on equivalent international market prices.
Fuel prices rose in India because global energy prices rose due to supply problems following Russia’s invasion of Ukraine and the return of demand after being hit by the pandemic. India is 85% dependent on imports to meet its oil needs.
To make matters worse, the rupee depreciated against the US dollar, making imports more expensive.