Partial rollback in ATF price hike as government steps in to check airfares

New Delhi: Oil marketing companies on Wednesday scaled back a move to sharply raise jet fuel rates, with the Centre permitting only a partial increase in rates despite the Iran war triggering a surge in global oil prices. The rare move of government intervention is expected to potentially help avert a spike in domestic airfares just ahead of elections in some states later this month and the peak summer travel season.

"In order to insulate the domestic travel costs from the substantial increase in international prices, state-owned oil marketing companies of the Ministry of Petroleum, in consultation with Ministry of Civil Aviation, have passed only a partial and staggered increase of 25% (only ₹15/litre) to the airlines," the oil ministry posted on X.

It added that airlines, while operating on international routes, will pay for the full increase in jet fuel prices consistent with what they pay in other parts of the world.


Oil companies rolled back a major increase in jet fuel prices within hours of pushing them to a record. Fuel makes up about 30% of the cost of operating an airline in India.

Indian Oil, which leads pricing moves, initially doubled the price in New Delhi to ₹2,07,341 ($2,187) a kiloliter for April. Hours later, it revised the rate to ₹1,04,927, according to the state-run company's website.

While crude prices have spiralled following the supply disruptions caused by the war, the crack spread or the difference between the market price of a barrel of crude and the jet fuel refined from it has climbed sharply higher. From $24.28 per barrel in February last week, the spread shot up to $81.44 by March 20, according to the International Air Transport Association (IATA).

Unprecedented Move

Airline executives termed the government move as unprecedented. Following the announcement, IndiGo recalibrated the fuel surcharge for domestic flights from ₹425 flat to a distance-based tiered structure varying between ₹275 and ₹950.

"The government's decision to allow only a partial increase comes as a bigrelief for the aviation industry at a time of unprecedented global uncertainty," said Ajay Singh, CMD of SpiceJet.

Civil aviation minister Ram Mohan Naidu said the government decision was a timely measure to ease pressure on passengers and the aviation sector.