Jet fuel prices were hiked by 2% to all-time high levels on Friday, in the backdrop of recent surge in international oil price. This was the seventh hike this year after the highest ever increase of 18% on March 16, 2022.
However, the price of petrol and diesel were kept unchanged on Friday, pausing for the second time in the last eleven days. The state-run oil market companies have raised fuel rates by ₹6.4 per litre over eleven days, following the completion of state assembly elections in five states.
Aviation turbine fuel (ATF) - the fuel used to fly airplanes - was raised by ₹2,258.54 per kilolitre, or 2%, to ₹1,12,924.83 per kl in the national capital, as per the price notified by state-owned oil retailers.
The oil companies revise jet fuel prices on the 1st and 16th of every month by taking into account the average international price of benchmark fuel in the preceding fortnight.
ATF prices have increased every fortnight since the start of the calendar year 2022, taking the total hike in rates to ₹38,902.92 per kl or almost 50%. In the steepest ever increase, the jet fuel prices were raised by 18.3%, or ₹17,135.63 per kl, to ₹110,666.29 per kl on March 16.
The price of Brent crude, the international benchmark, recently touched nearly 14-year high of around $140 a barrel after the U.S. and UK announced bans on Russian oil exports in response to Moscow’s invasion of Ukraine. In the overnight trade, crude prices slid 7% to slip below $100 per barrel after the U.S. government announced the largest-ever release from its strategic petroleum reserve to bring down oil prices. On Friday, the U.S. WTI crude futures were trading 0.58% lower at $99.70 a barrel, while the Brent oil futures slipped 0.4% to $104.25 per barrel.
The sharp rise in the jet fuel prices, which constitutes around 40% of the running cost of an airline, would impact profit margins of aviation companies such as SpiceJet and IndiGo, which have incurred huge losses since the onset of the Covid-19 pandemic.
The civil aviation ministry removed restrictions on all domestic flights in October last year, while it allowed airlines to operate 100% commercial international flights from March 27 this year, taking into account the increased vaccination coverage across the globe.
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