India's Aviation Turbine Fuel (APF) cost soared to an unprecedented high after oil prices spiked globally due to escalating tensions in West Asia. The price of ATF was more than doubled to a record Rs 2.07 lakh per kilolitre on Wednesday, mirroring the surge in global oil prices last month, but for domestic airlines, the increase would only be 8.5 per cent.
Domestic airlines will pay half of what other carriers, such as non-scheduled, adhoc and charter would pay. For them, the prices have gone up by Rs 110,703.08 per kl, or 114.5 per cent, to Rs 207,341.22 per kl. Jet fuel prices were deregulated more than two decades back, and since then, the rates are aligned with benchmark international prices, as per a written understanding with the airlines.
With fuel constituting nearly 40 per cent of operating costs, airlines already reeling from longer detours due to airspace restrictions in West Asia are expected to face additional financial pressure. As per reports, airfares are likely to rise further as carriers adjust pricing to offset rising expenses.
Why jet fuel costs are rising
The ongoing conflict in the Middle East has severely disrupted oil supply chains. Key oil producers such as Kuwait, Saudi Arabia and Iraq have reduced output, while export routes are increasingly strained. Iran's attacks on commercial vessels and critical infrastructure have intensified regional instability. The situation has almost halted movement through the Strait of Hormuz, which is crucial for nearly one-fifth of global oil shipments.
How will it impact travellers?
Experts have indicated that passengers should prepare for costlier tickets as airlines reassess their fare structures. Airlines may introduce or expand fuel surcharges, a practice commonly used outside the United States. The aviation industry is also grappling with operational disruptions caused by airspace closures since February 28. As per reports, Indian carriers are already consuming more fuel as they take longer alternative routes for several international flights. Last month, many domestic airlines added fuel surcharges, and the International Air Transport Association has noted a visible upward trend in airfares due to the turmoil in the region.
How prices are revised
It is worth noting that Indian Oil Corporation along with Bharat Petroleum and Hindustan Petroleum adjust ATF and LPG prices on the first day of each month. These revisions are based on global benchmarks and fluctuations in currency exchange rates, which have been volatile amid geopolitical uncertainty.
