ATF prices hiked by 10% to ₹55,737.91 per kl in Delhi
3 min read . Updated: 01 Mar 2021, 10:46 AM IST- Jet fuel prices are revised every fortnight by state-run oil marketing companies, and have been on the rise since October
New Delhi: Oil marketing companies (OMCs) on Monday hiked prices of aviation turbine fuel (ATF) by about 10% over last month as global crude oil prices firmed up on improved demand. Jet fuel accounts for about a fourth of expenses for major domestic airlines.
ATF prices stood at ₹59,400.91 per kiloliter (kl) at New Delhi on Monday, according to a notification by Indian Oil Corp. Ltd (IOCL).
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ATF prices were increased to ₹55,737.91 per kl in New Delhi on 16 February from ₹53,795 per kilo litre on 1 February. Jet fuel prices are revised every fortnight by state-run oil marketing companies, and have been on the rise since October.
As of Monday, ATF prices in Mumbai stood at ₹57,519.65 per kl, in Chennai it was at ₹60,658.61 per kl and in Kolkata it was at ₹63,828.81 per kilo litre.
In comparison, on 1 February, in Mumbai ATF price stood at ₹51,900 per kilo litre, Chennai ( ₹54,845), and Kolkata ( ₹58,181). ATF prices differ across cities due the taxes levied by states.
“The ATF prices increased sequentially by 24.1% in July 2020 and by 4.2% in August 2020. However, it declined sequentially by 3.4% in September 2020 and by 5.6% in October 2020, before increasing 4.6% in November 2020, 9.1% in December 2020, 10.2% in January 2021, and 5.4% in February 2021 (as on 1 February 2021)," said Kinjal Shah, vice president, ICRA, in an 8 February report.
The price of Brent crude stood at $65.36 a barrel on Monday, a rise by 30% on an annual basis, according to Bloomberg data.
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The increase in ATF prices is linked to a surge in international crude oil prices, though Indian state and central governments levy huge taxes on the fuel.
Oil-marketing companies like Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation follow import parity pricing for ATF.
Import parity pricing implies a price-setting mechanism in which the price is set on the basis of the cost of importing it.
Airlines, whose finances have been battered by the ongoing covid-19 pandemic, see the rising ATF prices as a further impediment towards a recovery.
"The government must include ATF under the Goods and Services Tax (GST) regime, which would bring relief to airlines," said a senior airline official with a prominent no-frill carrier.
Expenses towards aviation turbine fuel contributes to about 25% of expenses at two listed Indian airlines, InterGlobe Aviation-operated IndiGo and SpiceJet Limited.
According to IndiGo, aircraft fuel expenses for the December quarter stood at ₹1,142.91 crore, while the airline's passenger revenue stood at ₹4,909.98 crore.
During the same period, SpiceJet's operating expense towards aviation turbine fuel stood at ₹453.87 crore while the airline's operating revenue stood at ₹1,691.65 crore.
Both IndiGo and SpiceJet reported fourth straight quarterly loss during the October-December 2020 quarter.
IndiGo reported a quarterly loss of ₹620.14 crore during the December quarter while rival SpiceJet Ltd reported a loss of ₹66.78 crore for the December quarter.
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