State-owned oil marketing companies (OMCs) on Wednesday reduced the price of aviation turbine fuel (ATF) supplied to domestic airlines by Rs 5 per litre with effect from July 1. Following the latest revision, the effective price of ATF for domestic airlines has been brought down to Rs 110 per litre, compared to Rs 115 per litre earlier.
The reduction comes after oil companies raised ATF prices by around 10 per cent last month while introducing a fixed-rate pricing mechanism aimed at reducing fuel price volatility.
As part of the revised pricing framework, the government has established a Rs 10,000 crore ATF Price Stabilisation Fund to provide greater over fuel costs for domestic airlines.
Under the mechanism, airlines can lock in ATF prices for the next three years, reducing their exposure to fluctuations in global energy markets.
The latest reduction comes amid continued volatility in international crude oil prices due to the ongoing conflict in West Asia.
Aviation turbine fuel is among the largest operating expenses for airlines, making any change in its price significant for the aviation sector.
While the reduction is expected to ease cost pressures on domestic carriers, any corresponding cut in airfares will depend on multiple factors, including passenger demand, market competition, route economics and other operating costs.
Separately, the Centre has revised export duties on petrol, diesel and aviation turbine fuel with effect from July 1, while leaving excise duty on petrol and diesel sold in the domestic market unchanged.
In another development, Nayara Energy has reduced petrol prices by Rs 5 per litre and diesel prices by Rs 3 per litre across its retail fuel outlets from July 1.
Commercial consumers have also received relief after oil marketing companies reduced the price of 19-kg commercial LPG cylinders to Rs 2,930.
The latest fuel price revisions are expected to provide some respite to airlines and commercial consumers, even as global energy markets continue to remain sensitive to geopolitical developments.