Govt Caps Airfare 25% | Domestic Flights Remain Affordable Amid Jet Fuel Surge

ATF i.e. jet fuel has become costlier by more than 100% in the international market. Despite this increase, the government has decided to limit the increase in ATF to only 25%.

Read this Q&A to understand this entire incident

Question 1: How much has the price of aviation fuel (ATF) increased from today?

answer: Looking at the international market, there was a possibility of the price of aviation fuel in India increasing by more than 100%. But the government has intervened and limited it to only 25%. Now ATF in Delhi has become Rs 1,04,927 per kilolitre, which was Rs 96,638 in March.

Question 2: Why did the government have to take this decision?

answer: According to the Petroleum Ministry, due to the closure of the Strait of Hormuz, an extraordinary situation has arisen in the global energy market. If the government had not intervened, fuel prices would have more than doubled. This decision has been taken to keep domestic air travel accessible.

Question 3: Will international flights also benefit from this?

answer: No. The government has made it clear that this relief is only for domestic flights. Those flights going abroad will have to pay the increased price of ATF. Flights operating on international routes will pay the same rates for jet fuel as are operating in the rest of the world.

Question 4: What effect will this have on the tickets of general passengers?

answer: Since the government has capped fuel inflation at 25%, there will not be a ‘sudden and drastic’ jump in domestic flight fares. However, even a 25% increase is not small, so airlines may increase ticket prices marginally.

Question 5: Why is the closure of the ‘Strait of Hormuz’ a matter of concern for India?

answer: This sea route is the world’s most important point for the supply of crude oil. This route has been blocked due to increasing tension between Israel, Iran and America. India imports a major part of its requirement from here. Prices have increased due to supply stoppage.

Question 6: When and how are ATF prices decided?

answer: ATF prices are regulated in India since 2001. These are determined by government oil companies on the first day of every month on the basis of international benchmarks.

Question 7: Can the relief increase in the coming times?

answer: It completely depends on the conditions in West Asia. At present, the government has increased the prices in a ‘staggered’ (installment) manner so that the prices do not increase suddenly. If tensions ease and supplies are restored, prices may stabilize in the future.

Question 8: If the government has imposed a cap of 25% then why have the prices increased by only 8-9%?

answer: The government has said that even if the international market rises by 100%, oil companies in India will not increase prices by more than 25% at a time. This does not mean that they have to increase only by 25%. The first installment can be 25%.

There is a 100% increase in the prices of crude oil in the international market. When it is processed into ATF in India, there are also refining costs, logistics and taxes involved. At present, the government has allowed pass-on of only a part of the basic cost.

Knowledge Part: Know what is ATF

Aviation turbine fuel (ATF) is a specialty fuel used in airplane turbine engines. Almost 40% of the total expenditure of any airline is spent on fuel alone, hence ATF prices directly affect the airfares.

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