Jet Fuel Price Cut By Rs 5 As Global Oil Prices Case: Will Air Tickets Get Cheaper?

Indian airlines received a much-needed respite on Wednesday after state-run oil marketing companies reduced the price of aviation turbine fuel (ATF), or jet fuel, by around ₹5 per litre. This marks the first reduction since fuel costs surged during the recent West Asia crisis. The revised price brings ATF in Delhi down to around ₹110 per litre, following a decline in international crude oil prices as geopolitical tensions in the Middle East eased and concerns over supply disruptions through the Strait of Hormuz subsided.

The reduction reverses part of the sharp increase seen over the past few months, when escalating tensions involving Iran pushed global crude prices higher, forcing airlines to contend with record fuel costs. Fuel is one of the biggest expenses for airlines, accounting for around 35-40% of operating costs under normal conditions. During the recent spike in oil prices, that share rose significantly, squeezing airline margins and prompting several carriers to increase fares or impose fuel surcharges on certain routes.

Will passengers see cheaper airfares?

While lower ATF prices are expected to ease financial pressure on airlines, passengers should not expect an immediate reduction in ticket prices. Airfares are determined by several factors, including demand, seat availability, competition, airport charges, and operational costs.

Airlines are therefore more likely to use the savings to offset recent increases in fuel expenses before considering fare reductions. However, if crude oil prices remain stable and demand softens, travelers could see more competitive fares in the coming weeks.

Part of a wider revision

The monthly fuel price revision also coincides with changes in export duties on petroleum products. Effective July 1, the government reduced export duties on diesel and aviation turbine fuel while increasing the levy on petrol exports, reflecting changing international market conditions. Domestic petrol and diesel prices sold through public sector oil companies remain unchanged despite the fall in global crude prices.

Commercial LPG cylinders, however, have become cheaper from July 1, providing relief to hotels, restaurants, and other businesses, while household LPG cylinder prices remain unchanged. The latest cut in jet fuel prices is expected to improve airlines' finances after months of elevated operating costs, though industry experts say sustained relief will depend on the direction of global crude oil prices and developments in West Asia.