Oil marketing companies (OMCs) have increased the price of Aviation Turbine Fuel (ATF) by around 10% while rolling out a price stabilisation regime that offers domestic airlines a fixed fuel rate for up to three years.
The move is aimed at shielding carriers and passengers from sharp swings in global oil prices. According to a report citing sources, with the increase, jet fuel for domestic airlines will now cost around Rs115 per litre, up from Rs104.93 per litre. This new rate will be locked in for up to three years for airlines that opt to participate in the government-backed price stabilisation scheme.
Airlines that do not opt for the scheme will continue to pay market-linked prices, currently around Rs142 per litre, similar to international carriers.
Airlines opting for the price stabilisation scheme will continue to receive ATF at Rs115 per litre, insulated from fluctuations in global fuel benchmarks.
According to sources, the scheme is completely voluntary, and airlines will have to decide whether they want to participate.
Under the scheme, participating airlines will pay a fixed free-on-board (FOB) benchmark price of Rs86.32 per litre, plus airport charges, oil company margins and applicable taxes. This will result in an effective selling price of about Rs115 per litre in Delhi, Rs114.5 per litre in Mumbai and Rs139 per litre in Chennai.
The revised rate compares with the earlier price of about Rs105 per litre in Delhi, which had remained unchanged for more than two months after the government allowed only a partial pass-through of higher global fuel costs triggered by the outbreak of the West Asia conflict in late February.
The government on Wednesday approved a one-time budgetary support of up to Rs10,000 crore for OMCs to help stabilise ATF prices for domestic airlines.