In an unprecedented move to shield the domestic aviation sector from the fallout of the West Asia conflict, the Indian government has implemented a two-tier pricing system for jet fuel. While the market rate for Aviation Turbine Fuel (ATF) technically doubled on Wednesday to a record ₹2.07 lakh per kilolitre, the actual increase passed on to domestic airlines has been capped at just 8.5 per cent.
Under this calibrated approach, domestic carriers will pay roughly half the rate charged to international airlines, non-scheduled operators, and charter flights. For these latter groups, prices have surged by a staggering ₹110,703 per kl—a 114.5 per cent jump—reflecting the extreme volatility in global energy markets since the closure of the Strait of Hormuz. Industry sources indicate that the Ministry of Petroleum and the Ministry of Civil Aviation intervened to ensure that the steepest hike in history did not immediately ground the nation's internal flight network.
The Ministry of Petroleum and Natural Gas clarified on social media that while ATF has been deregulated since 2001, the "extraordinary situation" prompted a staggered price hike of only ₹15 per litre for the domestic market. In contrast, foreign routes will be required to pay the full market rate, consistent with global price points. This is the first time ATF has ever breached the ₹2 lakh per kl mark; the previous record was set in 2022 following the invasion of Ukraine.
The timing is also tricky because the airlines are already reeling from increased costs because of war-related airspace closures, which have led to the implementation of longer flight paths to Western destinations. Since fuel accounts for 40 per cent of an airline's overheads, the increased hike, although reduced, is expected to put pressure on margins.
This energy crunch has also spilled over into the commercial sector. The price of a 19-kg commercial LPG cylinder, widely used by hotels and restaurants, was hiked by ₹195.50 on Wednesday, bringing the cost in Delhi to ₹2,078.50. This follows a previous increase of ₹114.50 on March 1. However, domestic households have been spared for now, with the price of a 14.2-kg cooking gas cylinder remaining steady at ₹913. Similarly, petrol and diesel rates remain frozen at levels set over a year ago, as the government continues to use state-run oil firms to absorb the shock of a 50 per cent rise in global crude prices.
Also read: Commercial LPG surges ₹195.5, mini cylinders by ₹51
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