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Jet fuel price hike lands already battered airlines in choppy waters

Airlines in India are facing rising prices in global operations caused by longer flight durations and disruptions in schedules since they have had to re-route their flights after Pakistan closed its airspace

Jet fuel price hike lands already battered airlines in choppy waters
Jet fuel price hike lands already battered airlines in choppy waters

New Delhi: Aviation turbine fuel (ATF) price was hiked by 8.15 percent to its costliest level this year, adding to the poor financial state of airlines in the country. As global oil prices increased, jet fuel prices increased by Rs 4,734.15 per kilolitre on Friday. Airlines in India are facing rising prices in global operations caused by longer flight durations and disruptions in schedules since they have had to re-route their flights after Pakistan closed its airspace. Moreover, high fuel prices consume a lot of airline profits as fuel takes up the majority of airline costs. From March 1, ATF price was Rs 62,795.12 per kilolitre in Delhi, said state-run Indian Oil Corporation (IOC), which supplies fuel to around 1,750 flights each day. Given that crude oil prices were relatively lower at the start of the year, ATF prices were relatively low.

Aviation sector facing tough time

As the Organisation of the Petroleum Exporting Countries (OPEC) and Russia cut supplies and the US imposes sanctions on Venezuelan state-owned oil company Petróleos de Venezuela SA and on Iran, any rise in international crude oil prices is likely to impact the Indian aviation industry. As per the Petroleum Planning and Analysis Cell, the price of the Indian basket of crude, the average of Oman, Dubai, and Brent crude, was US$ 65.78 per barrel on February 28. This price, which averaged US $47.56 per barrel in FY17 and US $56.43 in FY18, posted an average of US$ 64.53 last month. Global crude oil prices had posted a record high of US$ 147 a barrel in July 2009.