ATF prices up over 14%, commercial LPG cost falls
₹1 lakh per kilolitre mark. In the national capital, jet fuel was priced at ₹1,12,419.33 per kilolitre, 14.12% higher from ₹98,508.26 in August. Similarly, in Kolkata and Chennai, ATF prices rose 12.74% and 13.85% to ₹1,21,063.83 per kilolitre on Friday.
Mumbai witnessed the biggest jump in prices as jet fuel costs 14.21% in the city at ₹1,05,222.13, according to data from the OMCs. This increase ATF prices may lead to a rise in airline tickets as the country is set to enter festive season during which domestic travel also gains pace. ATF price comprises of around 40% of the ticket price.
This is the third consecutive increase in jet fuel prices. Suprio Banerjee, Vice President & Sector Head - Corporate Ratings, ICRA noted that airlines over have been witnessing fluctuations in ATF prices and have formulated different strategies to tide over such a rise in ATF prices, through both pricing as well as internal cost control. "Overall, on an aggregate basis the airlines look at strategies to expand their RASK-CASK (revenue per available seat kilometer - cost per available seat kilometer) spread, which becomes their core profitability metrics.
Given the elastic nature of service the airlines offer, the airlines need to be competitive in terms of pricing/airfares so as not to impact the demand," Banerjee said. A recent report by S&P Global Commodity Insights showed that air travel measured by flights, returned to pre-pandemic level in India but jet fuel demand is still expected to remain below 2019 level in 2023, due to a slower rebound in long-haul travel and distressed airline industry. Led by a surge during the summer travel season, India’s total domestic commercial flights averaged around 88,400 per month for the period of
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