April 20, 2024


Delighting finance buffs

Big blow to struggling airlines as jet fuel price hiked by almost 50{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}

The struggling aviation sector received another shock on Monday as the price of aviation turbine fuel (ATF), a major cost component for airlines, has been hiked by almost 50 per cent in June, showed data on the Indian Oil Corporation’s (IOC) website.

The cost of a kilolitre of jet fuel in June will cost airlines Rs 33,575 in comparison to Rs 22,544 in May — an increase of Rs 11,031 per kilolitre of ATF. The price of a kilolitre of ATF will cost Rs 33,575 in Delhi while the cost will rise to Rs 38,543 in Kolkata. In Mumbai, a kilolitre of ATF will now cost Rs 33,070.

Like LPG, ATF rates are also revised by oil companies at the beginning of every month.

The fresh jolt to airlines could disrupt the aviation industry further as air travel remains muted in the wake of the coronavirus crisis in the country. International air travel continues to remain banned as part of the government’s fresh lockdown guidelines.

While airlines struggled with high ATF prices — as much as Rs 65,000 per kilolitre — till February, they could not benefit from a sharp drop in prices due to the restrictions on flights due to the coronavirus lockdown.

Limited operations were only allowed from May 25 by the government and airlines have already started flagging issues about the low volume of bookings.

Since the revenue stream continues to be weak for most airlines, the hike in ATF prices could further derail future plans for airlines, who are already struggling with major expenses like salaries, airport charges and more.

Commenting on the fresh hike, Nishant Pitti, CEO and Co-Founder of EaseMyTrip, said, “Airline industry has got no relief from the government in this crisis and now the ATF price hike only adds to our woes.”

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