Explained: This article explains the political background, key decisions, and possible outcomes related to Explained : Jet fuel prices reach record high amid Iran war and Its Impact and why it matters right now.
Indian public sector oil companies have more than doubled the price of aviation turbine fuel, with prices in New Delhi reaching Rs 207,341.22 ($2,212 or €1,911) per kiloliter, Indian media reported.
This is the first time jet fuel prices have crossed the Rs 200,000 mark in India for domestic flights. The previous high was about Rs 110,000 when Russia invaded Ukraine in 2022.
The price of jet fuel for international flights also saw a 107% increase.
Indian oil companies determine the market price of aviation fuel and announce the revised rate on the first day of every month.Â
The hike is due in part to the disrupted fuel supply chain in the Middle East, and partly due to the Indian rupee’s worst performance in 14 years.Â
In March, Indian airlines had announced a fuel surcharge for domestic and international flights, citing the steep rise in crude oil prices since the US and Israel began their war in Iran. Airlines may revise this surcharge in the coming days.Â
Under normal conditions, India’s aviation ministry enforces a price cap on air fares to ensure affordable tickets for Indians. However, in light of the Iran war, the ministry suspended this price ceiling last month to allow airlines to adjust ticket prices as required.
Government takes the pressure off
The record rate of jet fuel raised immediate concerns about its impact on airlines’ profitability and the prices of domestic air tickets for consumers.Â
India’s petroleum ministry attempted to assuage these concerns in a post on social media, saying Indian oil companies would stagger the price increase to airlines.Â
“In order to insulate the domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies of the Ministry of Petroleum, in consultation with the Ministry of Civil Aviation, have passed only a partial and staggered increase of 25% (only Rs.15/litre) to the airlines,” it said.Â
Airlines will have to pay the full price for international routes, it added.