Air travellers hoping for lower ticket prices after the latest reduction in aviation turbine fuel (ATF) prices may have to wait a little longer, industry sources told NDTV Profit.
Oil marketing companies (OMCs) have reduced ATF prices by around Rs 5 per litre, bringing the price down from approximately Rs 115 per litre to Rs 110 per litre. While the move offers some relief to airlines, industry sources say it is unlikely to immediately translate into cheaper airfares.
The reason is simple: despite the latest cut, jet fuel prices remain significantly above the levels seen before the recent geopolitical tensions in West Asia pushed up global crude oil prices.
ATF currently costs around Rs 1.10 lakh per kilolitre, compared with roughly Rs 1.04 lakh per kilolitre before the conflict. Airlines believe fuel prices need to soften further before they can meaningfully reduce ticket prices.
Fuel is one of the largest operating expenses for airlines, accounting for as much as 35-40% of total costs. Although the latest reduction lowers operating expenses, the savings are not yet substantial enough to offset the higher fuel costs airlines have absorbed over recent months.
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Industry executives indicate that carriers are closely monitoring fuel prices and are likely to pass on the benefit to passengers once ATF prices return to pre-war levels and remain stable.
Airfares are influenced by several factors beyond fuel costs, including passenger demand, aircraft availability, route capacity, airport charges and seasonal travel patterns. As a result, changes in ATF prices do not always lead to an immediate adjustment in ticket prices.
The latest reduction comes after fuel prices surged following heightened tensions in West Asia, prompting airlines to contend with higher operating costs. Many carriers also faced additional expenses from longer flight routes and airspace restrictions during the period, further limiting their ability to lower fares.
While the Rs 5-per-litre cut provides some financial relief, airlines are expected to use the benefit to partially absorb elevated operating costs rather than immediately reduce fares.
For passengers, meaningful fare reductions are more likely if global crude oil prices continue to soften, allowing ATF prices to move closer to their pre-conflict levels. Until then, airlines are expected to maintain existing pricing strategies while keeping a close watch on fuel costs and demand trends.
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