1 hr ago
India’s ATF Pricing Debate Intensifies as Airlines Seek Reset
Airplanes need a lot of fuel, and that fuel has become more expensive in India.
Its price is linked to prices in other countries, the exchange rate, and taxes.
Airlines say fuel now takes up a much bigger share of their costs than it used to.
The government proposed a fund to help protect airlines from big price changes, but airlines did not sign up in time.
The government is considering whether to bring the fund back.
Airlines want fuel prices to reflect the cost of making fuel in India and want taxes to be more predictable.
Some airlines have added or changed fuel surcharges for passengers.
The challenge is to keep flying affordable while helping airlines manage their costs.
Aviation turbine fuel (ATF) in India is linked to global benchmarks, with prices also affected by the rupee-dollar exchange rate and taxes.
ATF prices rose 13% in one month to ₹137 per litre in Delhi, according to the article.
The Federation of Indian Airlines says fuel represents around 55–60% of airline operating costs, up from 30–40% historically.
A proposed ₹10,000-crore price stabilisation fund did not take effect after airlines failed to sign the required agreement with state-owned oil companies in time.
Airlines are seeking pricing tied to actual refining costs and more predictable taxes, while several carriers have introduced or revised passenger fuel surcharges.
- Who
- Indian airlines, the Federation of Indian Airlines, and the government.
- What
- Airlines are seeking changes to ATF pricing and taxation after a sharp rise in fuel costs.
- Where
- India; the article cites an ATF price of ₹137 per litre in Delhi.
- When
- After ATF prices rose 13% in one month; the article also reports the minister said on Tuesday that the government was considering reviving the fund.
- Why
- Global benchmark pricing, currency movements and taxes expose airlines to fuel-price volatility and higher operating costs.
Airline Industry Requests
Current Policy Considerations
How ATF should be priced
Airline Industry Requests
The Federation of Indian Airlines wants domestic ATF prices linked to actual refining costs rather than volatile international benchmarks.
Current Policy Considerations
The current system links domestic ATF prices to international benchmarks; the article says any savings from a different formula would depend on crude costs and the formula used.
Taxes and price protection
Airline Industry Requests
Airlines seek a fixed-rate excise levy and continued relief on taxes and airport charges; they have renewed calls for a workable price-protection mechanism.
Current Policy Considerations
The government is considering whether to revive the proposed stabilisation fund and is seeking input from airlines and oil marketing companies.
Key facts
- ATF price cited
- ₹137 per litre in Delhi after a 13% monthly increase
- Fuel share of airline costs
- Around 55–60%, according to the Federation of Indian Airlines
- Historical fuel cost share
- Around 30–40% of airline operating costs
- Proposed stabilisation fund
- ₹10,000 crore, built around a benchmark of ₹115 per litre
- Why the fund lapsed
- No domestic airline signed the required memorandum of understanding with state-owned oil marketing companies within the prescribed timeframe
- Airline proposals
- Cost-plus pricing for domestic ATF, a fixed-rate excise levy, and continued relief on taxes and airport charges
- Possible government action
- Civil Aviation Minister K Ram Mohan Naidu said the government was considering reviving the fund
Quotes
Markets by Zerodha
Financial markets account whose post is quoted in the article.
“The government offered a ₹10,000-crore price safety net at ₹115 a litre—but when market prices temporarily dropped below that baseline, not a single airline signed up.”
businesstoday.in
Sources
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