Jet fuel price reduced by 7.3%

The price of ATF (Aviation Turbine Fuel) of Jet fuel declined by 7.3%. The price of jet fuel now stands at Rs. 64,414.98 per kilolitre (kl) in Mumbai, against Rs. 69,610.50 earlier, while the price fell by Rs. 4,987.7 per kl to Rs. 62,537.93. The rates vary between states because of differences in local sales tax or VAT.
This is the fourth reduction in jet fuel prices since August this year. The latest reduction was on 1st October when the rates were cut by almost 3%. Three fuel retailers, namely, IOC, HPCL and BPCL revise jet fuel and non-subsidised LPG prices on the first of every month. This monthly revision is based on the average international prices in the preceding month.

Mechanics of the price reduction and its Implications

The price reductions have been triggered by declining international oil prices. The reduced oil prices led to cheaper imports which has led to the price reduction.
Since jet fuel constitutes 40% of an airline’s operating costs, the price cut is expected to ease the financial burden of cash-strapped airline carriers. Also, the continuous price reductions may lead to a reduction in passenger fares also in the near future.

Other price reductions

Oil companies also cut petrol price by Rs. 2.41 per litre and diesel by Rs. 2.25 per litre. This was the sixth price reduction since August this year. Also, the price of LPG was cut by Rs. 18.5 to Rs. 865 per 14.2 kg cylinder. This was the fourth price reduction of LPG gas since August.


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