ATF prices hiked by 5.46%: Will flight tickets rise?
What's the story
The price of aviation turbine fuel (ATF) for domestic airlines has been increased by 5.46%, or ₹6.28 per liter. The new price is now ₹121.28 per liter, up from the previous rate of ₹115 per liter. This marks the second consecutive monthly hike in ATF prices after a ₹5 increase in August and a reduction in July's rates.
Cost implications
Impact on airfares
The latest ATF price hike will increase fuel costs for domestic airlines, which account for 35-40% of their overall operating expenditure in India.
This could lead to a possible rise in airfares.
However, it's worth noting that changes in ticket prices also depend on factors such as passenger demand, competition among airlines, and available network capacity.
Price surge
Global crude oil prices rising
The latest ATF price hike comes as global crude oil prices are on the rise, mainly due to tensions between the US and Iran that could disrupt supplies through the Strait of Hormuz.
Brent crude is now close to $90 a barrel, while West Texas Intermediate (WTI) has crossed $86.
This increase in global oil prices directly impacts India's domestic airlines by raising their operating costs further.