Significant Reduction in Aviation Fuel Prices for International Flights in India

Aviation Fuel Price Cuts Announced

Indian oil marketing companies (OMCs) have introduced a substantial 27% reduction in the cost of aviation turbine fuel (ATF) for international flights. This adjustment translates to a decrease of $400 per kilolitre, aligning international jet fuel prices more closely with those for domestic flights. However, the OMCs have opted to maintain the ATF prices for scheduled domestic flights unchanged for the second consecutive month. In the previous month, the ATF price for domestic flights remained stable, while international prices saw an increase of $76.55 per kilolitre, reaching $1,511.86 per kilolitre.

In April, the central government had imposed a cap of 25% on domestic ATF price hikes. Additionally, both the Delhi and Maharashtra state governments have reduced the value-added tax (VAT) on ATF. Specifically, the Maharashtra government has lowered the VAT from 18% to 7%, effective until November 14.

Prior to these changes, major Indian airlines had urged state-run oil refiners to postpone any increases in jet fuel prices for domestic flights until the conflict in West Asia concludes. The central government has also revised export duty rates, stating that the duty will be ₹1.5 per litre for petrol, ₹13.5 per litre for diesel, and ₹9.5 per litre for ATF.

Reports indicate that leading airlines such as Air India and IndiGo may reduce their domestic flight operations starting June 1 due to escalating fuel costs, a situation expected to persist for three months as they grapple with rising aviation turbine fuel prices.