Flight ticket prices may again increase:Govt hikes jet fuel prices by up to 10%

Aviation turbine fuel (ATF) prices were raised by around 10% on Tuesday as state-owned fuel retailers rolled out a new type of price stabilisation system, ironically to shield passengers from hike in airfares stemming solely out of jet fuel rate increment Jet fuel for domestic airlines will now cost ₹115 per litre, up over 10% from ₹104.927, industry sources said to news agency, PTI. Domestic flight ticket prices may not increase for 3 yrs: Govt launches new type of jet fuel pricing system shielding airlines from volatility in global oil rates Interestingly, the new type of jet fuel pricing stabilisation system will shield airlines from volatility in global oil rates as they will get ATF at a fixed rate. The new rate will be locked in for up to three years for airlines that opt to participate in the government-backed price stabilisation scheme. Airlines that do not opt for the scheme will pay market-linked prices, currently around ₹142 per litre, similar to international carriers. Those opting into the price stabilisation scheme will continue to receive ATF at ₹115 per litre, insulated from global benchmark fluctuations. While non-participating carriers will benefit from price declines, they will also face higher costs when international rates rise. Sources said the scheme is completely voluntary, and airlines will have to take a call if they want to participate in it. What is ATF pricing stability regime? To address these losses, the Union Cabinet approved a Rs 10,000-crore price stabilisation scheme aimed at capping ATF prices and shielding airlines from volatility linked to geopolitical tensions, while also supporting the financial health of state-owned oil companies. How ATF pricing stability regime works?
Under the scheme, whenever global benchmark prices rise above the base rate of ₹86.32, the government will provide an interest-free advance to oil marketing companies to cover the difference. When prices fall, the differential will be recovered from the companies and returned to the Consolidated Fund of India. Why govt rolled out the new pricing regime? Sources said international jet fuel prices had climbed to as high as ₹142 per litre in May from pre-war rates of ₹60.50 per litre, raising concerns over airline operating costs and potential fare increases.
The new arrangement, they said, is not a subsidy but a temporary stabilisation framework intended to smooth volatility in fuel prices while ensuring accountability, monitoring and full recovery of funds.