On Tuesday, international prices of jet fuel declined by a record breaking 14.7% – effective from January 1, making it cheaper than the retail cost of both petrol and diesel in India – giving a flying new year start to the aviation sector.
The Indian Oil Corporation and state-owned oil firms notified about a drastic 14.7% price slash in the prices of Aviation Turbine Fuel (ATF) used to fuel all jets and airplanes. With the renewed rates issued by the state-owned oil firms, jet fuel just got Rs 9,990 per kilolitre cheaper and now costs Rs 58,060.97 per kilolitre. This is the biggest single price cut in jet fuel since 2008 and is the second major slash down within a month, after the 10.9% cut down that had made the ATF Rs 8,327.83 per kilolitre cheaper, since December 1, 2018.
The two consecutive reductions in jet fuel has brought ATF rates to their lowest levels in a year, so much that it is now cheaper than what retail petrol and diesel costs in India. So buying fuel for a car or a bike is literally costlier than flying a jet as a litre of petrol costs Rs 68.65 and a litre of diesel costs Rs 62.55, while a litre of ATF costs Rs 58.06 per litre. In fact, the jet fuel costs even cheaper than non-PDS kerosene that is worth Rs 59.53 a litre in cities like Mumbai.
The rise of price in crude oil to $85 per barrel in October 2018 had hampered the finance department of airline operators, but IRCA believes that this has given India’s cash-strapped domestic aviation a much-needed relief after numerous issues and debts faced by the industry in 2018. The prices of fuel are revised on 1st of every month by the state-owned fuel retailers, depending on the average price of ATF in the international market and the ongoing rupee-dollar exchange rates in the preceding month; and hence the OPEC meeting next week could further affect ATF prices.