Jet fuel prices soar to record high after 5.2% hike

Flying may soon get costlier in India as aviation turbine fuel (ATF) prices have skyrocketed to record high levels across the country.

Jet fuel rates were hiked by 5.2% on Wednesday, following a spike in global crude oil prices. Brent crude, the international benchmark, has been trading over $90 a barrel.

This is the fourth hike in jet fuel prices this year. Aviation fuel prices were also raised on the day of the Union Budget 2022 by 8.5%.

ATF price in Delhi was increased by ₹4,481.63 per kilolitre or 5.2% to ₹90,519.79 per kl, according to a price notification of state-owned fuel retailers. The current ATF price is the highest ever in the national capital. In comparison, when international crude oil prices touched $147 per barrel in August 2008, the jet fuel price stood at ₹71,028.26 per kl.

Jet fuel price in Mumbai jumped to ₹88,987.20 per kl and it stood at ₹94,888.70 per kl in Kolkata.

Meanwhile, prices of petrol and diesel have remained unchanged despite the steep rise in international crude oil prices. This comes at a time when the country is going through legislative assembly polls in states like Uttar Pradesh, Punjab, Uttarakhand and Goa.

Jet fuel prices are changed on the 1st and 16th of every month based on the average price of the international benchmark in the preceding fortnight.

The steep rise in jet fuel prices threatens to derail the slow recovery that airlines witnessed in the third quarter of the ongoing financial year.

InterGlobe Aviation, the parent of budget carrier IndiGo, posted a surprise profit in the third quarter on February 4. Budget carrier SpiceJet too ended the December 2021 quarter with a profit of ₹23 crore.

India's domestic air traffic plunged by nearly half in January compared with the previous month as the third wave of the Covid-19 pandemic, led by the Omicron variant, peaked across the country, Fortune India reported earlier this month.

Domestic passenger traffic slumped by around 43% to an estimated 64 lakh in the first month of 2022 compared with 112 lakh in December 2021, according to a report by rating and research firm ICRA. On a year-on-year basis, the drop was around 17%. Capacity deployment by airlines for January 2022 was around 7% lower than January 2021, the report said. The Ministry of Civil Aviation had allowed 100% capacity deployment on domestic routes from October 18, 2021.