Aviation turbine fuel (ATF) prices for domestic airlines have been increased by 5.46%, or Rs 6.28 per litre, according to sources at Indian Oil Corporation Ltd. (IOCL). The price has been raised from Rs 115 per litre to Rs 121.28 per litre, marking the second consecutive monthly increase.
The latest increase will raise fuel costs for domestic airlines and could put pressure on airfares. However, changes in ticket prices also depend on passenger demand, competition and available network capacity.
Second straight hike
IOCL sources said the latest increase follows a Rs 5 per litre hike on Aug. 1, when ATF prices for domestic airlines rose from Rs 110 per litre to Rs 115 per litre. ATF prices had been cut by Rs 5 per litre in July.
Jet fuel accounts for about 35% to 40% of an airline's overall operating expenditure in India, making ATF prices a key cost for domestic carriers.
Crude oil prices
The latest ATF increase comes as oil prices moved higher after their biggest gain in three weeks on Monday. Fresh hostilities between the US and Iran raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz.
Crude oil prices posted a marginal increase in August after a volatile month, with the market reacting to stop-start efforts to end the conflict and US pledges to cripple Iran's economy.
West Texas Intermediate traded above $86 a barrel after rising 2.8% in the previous session, while Brent settled near $90 a barrel on Monday.
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