Domestic airlines will now fly at a benchmark price of Rs 86.32 per litre of Aviation Turbine Fuel (ATF) thanks to a recently approved price stability policy that aims to protect carriers from the unpredictable international fuel markets. This is a huge relief for the aviation business.
In response to growing global crude oil prices caused by unrest in West Asia, the government has taken this step to protect airlines’ finances and keep rates from skyrocketing. As part of the optional program, member airlines will buy ATF for their domestic operations at a set Free-on-Board (FOB) benchmark price of Rs 86.32 per litre.
An international benchmark price of Rs 104.49/litre has been established. Opting out of the initiative will not affect an airline’s ability to buy ATF at the current international market price of approximately Rs 142/litre. The plan comes after nearly two months of a near-complete freeze in ATF prices in Delhi, which were hovering at Rs 105/litre (including taxes and other costs).
Airline companies and customers were shielded from the effects of skyrocketing fuel prices caused by the geopolitical crisis involving Iran by the introduction of this temporary intervention.
Oil marketing corporations (OMCs) allegedly lost a lot of money under the arrangement, therefore the government came up with a more organised stabilising method.
Image: Business Today
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