Aviation turbine fuel (ATF), or jet fuel, witnessed a sharp revision in India amid a surge in global crude oil prices linked to tensions in West Asia.
According to media reports, the Initial data released by Indian Oil Corporation (IOC) showed prices had more than doubled to over ₹2.07 lakh per kilolitre.
However, the rates were revised shortly after, with the government clarifying that domestic airlines will not bear the full impact of the increase.
Partial Hike for Domestic Airlines
The Ministry said oil marketing companies, in consultation with the Ministry of Civil Aviation, have implemented only a partial and staggered hike of about 25% (around ₹15 per litre) for domestic carriers.
“Foreign routes will pay for the full increase in ATF prices consistent with what they pay in other parts of the world,” the ministry said in a statement.
As per revised rates effective April 1, ATF prices for domestic airlines are around ₹1.04 lakh per kilolitre in Delhi. Other metro cities such as Kolkata and Chennai are seeing levels above ₹1.09 lakh, while Mumbai is lower at around ₹98,000 per kilolitre.
Global Factors Driving Price Surge
Global crude oil prices remain elevated due to geopolitical tensions involving Iran, the United States and Israel.
In morning trade, Brent crude was around $105 per barrel, while WTI crude hovered above $102 per barrel, both registering gains of over 1%. The sustained rise in crude prices has pushed up aviation fuel costs, which are linked to international benchmarks, said reports.
Data from the International Air Transport Association shows that global jet fuel prices have nearly doubled within a month, underlining the scale of the increase.
ATF is one of the biggest cost components for airlines, typically accounting for up to 40% of operating expenses. Any increase in fuel prices directly raises operational costs for carriers.
Airlines are also facing longer flight routes due to airspace restrictions in parts of West Asia, which has led to higher fuel consumption. A weaker rupee has further increased the burden, as fuel is priced in dollars.
Sources from oil marketing companies said ATF prices could be raised further in phases, depending on how the situation in West Asia develops.
Call to Cut VAT
Amid rising cost pressures, Civil Aviation Minister Ram Mohan Naidu has urged state governments to consider reducing Value Added Tax (VAT) on aviation turbine fuel (ATF) to ease the financial burden on airlines.
ATF remains one of the most heavily taxed aviation inputs in India, with VAT rates ranging between 18% and 29% across major states. In some cases, these taxes form a substantial portion of the final fuel cost, making operations significantly more expensive compared to global benchmarks where such taxes are lower or more uniform.
A reduction in VAT, if implemented, could help airlines partially offset the recent surge in global fuel prices, stabilise operating costs, and improve overall financial health of carriers that are already dealing with multiple pressures.
Lower fuel costs may also provide airlines some room to avoid sharp increases in ticket prices, especially in the domestic market where fares are highly sensitive to cost changes. However, the extent of this relief would depend on how many states respond to the Centre’s appeal and by how much they reduce VAT.
At the same time, states rely heavily on VAT from ATF as a source of revenue, which could make them cautious about implementing cuts. Any decision is likely to involve balancing revenue considerations with the need to support the aviation sector.
It remains to be seen how states respond to the proposal and whether any tax relief will translate into more stable or affordable airfares for passengers on both domestic and international routes.