The government has put a limit on the monthly increase in jet fuel prices for domestic flights at a maximum of 25%, as reported by Reuters on Thursday. Defence Minister Rajnath Singh praised the decision, emphasizing that capping jet fuel prices would shield passengers from sudden airfare hikes.
This move comes amidst the escalating global energy crisis triggered by disruptions in maritime traffic through the Strait of Hormuz. The strategic energy chokepoint, which previously accounted for nearly 20% of global energy flows, has been effectively closed since early March due to the ongoing conflict between Israel and the US on one side and Iran and its allies on the other.
The Narendra Modi-led government imposed the 25% cap a day after Indian retailers raised jet fuel prices by 8.5% on April 1. Aviation turbine fuel (ATF) prices are revised in line with international benchmarks as ATF is a deregulated product, according to the Ministry of Petroleum and Natural Gas. With surging global crude oil prices, a significant increase in jet fuel rates was anticipated from the beginning of April.
Despite oil prices exceeding USD 100 per barrel within a month, the ministry clarified that only a partial and staggered increase of 25% (equivalent to Rs 15 per liter or Rs 15,000 per kiloliter) is being passed on to airlines. IndiGo, India’s largest airline, adjusted its fuel surcharge following the price hike, with revised charges ranging from Rs 275 to Rs 10,000.
IndiGo explained that while fully offsetting the fuel price rise would necessitate substantial fare adjustments, they opted to pass on a relatively smaller amount to customers to mitigate the burden on them. The airline had been applying fuel surcharges between Rs 425 and Rs 2,300 on domestic and international flight tickets since March 14 in response to the escalating fuel prices caused by the ongoing conflict.
– Ends