Under the revised pricing structure, jet fuel for domestic carriers has risen to Rs 115 per litre from the earlier Rs 104.927 per litre, according to industry sources cited by the Press Trust of India. The adjustment comes alongside the rollout of a government-backed scheme that allows airlines to lock in fuel prices for a period of up to three years, subject to voluntary participation.
As part of the stabilisation mechanism, airlines that opt into the scheme will pay a fixed rate, while those that choose not to participate will continue to purchase aviation turbine fuel at market-linked prices, currently around Rs 142 per litre, comparable to international carrier benchmarks. Participating airlines will be insulated from sudden price surges but will also forgo potential benefits when global prices decline.
Sources confirmed that participation in the scheme is optional, and each airline must independently decide whether to join the framework.
Under the structure, airlines opting in will pay a fixed free-on-board benchmark price of Rs 86.32 per litre, in addition to airport charges, oil company margins, and applicable taxes. This results in an effective selling price of Rs 115 per litre in Delhi, Rs 114.5 per litre in Mumbai, and Rs 139 per litre in Chennai.
The government has formally introduced a Rs 10,000-crore price stabilisation programme aimed at curbing volatility in aviation turbine fuel pricing and providing financial stability to both airlines and state-run fuel retailers. The Cabinet has approved the scheme to address mounting pressure caused by fluctuating global energy markets.
Under the mechanism, when international benchmark prices exceed the base rate of Rs 86.32 per litre, the government will extend interest-free advances to oil marketing companies to bridge the differential. When prices decline, the excess amount will be recovered and transferred back to the Consolidated Fund of India.
Aviation turbine fuel accounts for nearly 40 percent of airline operating costs and can rise to as much as 60 percent during periods of extreme volatility, making it one of the most critical cost components for the aviation industry.
Officials noted that international jet fuel prices had surged to nearly Rs 142 per litre in May from pre-conflict levels of approximately Rs 60.50 per litre, raising serious concerns over airline profitability and potential fare escalation.
Authorities clarified that the initiative is not a subsidy but a temporary stabilisation arrangement intended to smoothen price volatility while ensuring full financial accountability and recovery of government funds.
For passengers, the policy is expected to reduce sudden airfare spikes typically triggered by sharp increases in fuel costs, thereby contributing to more stable and predictable ticket pricing over time.
About The Author
1.jpg)
Comment List