Jet fuel prices raised by 10% as oil firms introduce fixed-rate plan for Airlines
Jet fuel prices have been increased by nearly 10%, but airlines can now lock rates for up to three years under a new government-backed stabilisation plan aimed at reducing fare volatility.
New Delhi: State-owned oil companies on Tuesday raised aviation turbine fuel (ATF) prices for domestic airlines by nearly 10 per cent while simultaneously introducing a fixed-rate pricing mechanism to shield carriers from global oil volatility.
Under the revised pricing structure, jet fuel for domestic airlines will now cost around Rs 115 per litre, compared to approximately Rs 104.9 earlier.
New Scheme Allows Rate Lock for Three Years
The newly introduced pricing framework allows airlines to voluntarily opt for a fuel stabilisation scheme that can lock ATF rates for up to three years.
Airlines participating in the scheme will pay a fixed effective rate of around Rs 115 per litre in Delhi, helping them avoid sudden spikes in international fuel prices. Those choosing not to opt in will continue paying market-linked rates, which are currently estimated to be significantly higher.
Move Comes Amid Global Oil Market Volatility
The decision comes as global crude oil prices continue to fluctuate due to ongoing geopolitical tensions in West Asia.
Industry sources said international jet fuel prices had surged sharply in recent months, increasing operational pressure on airlines.
ATF remains one of the largest expenses for airlines, accounting for nearly 40 per cent of operating costs and rising even higher during periods of market instability.
Government Approves Stabilisation Framework
To manage volatility and reduce financial stress on both airlines and oil companies, the Union government approved a Rs 10,000-crore price stabilisation framework.
Under the mechanism, when global benchmark prices rise above a fixed base level, the government will temporarily support oil marketing companies through interest-free advances.
The amount will later be recovered once prices decline. Officials clarified that the arrangement is not a subsidy but a temporary stabilisation system aimed at balancing airline costs and protecting state-run oil companies from heavy losses.
Possible Relief for Air Passengers
Industry experts believe the scheme may help reduce sudden airfare hikes that typically occur when fuel prices rise sharply.
By offering airlines greater predictability in fuel expenses, the government hopes to bring more stability to ticket pricing and minimise the direct impact of global oil shocks on travellers.
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