Jet fuel prices for domestic airlines cut by ₹5/litre on softening international oil prices

Aviation turbine fuel (ATF) prices for domestic airlines were cut by ₹5 per litre on Wednesday to ₹110 per litre after international oil prices softened following easing tensions in West Asia.

This is the first reduction since the West Asia crisis led to a spike in jet fuel rates to a record high.

The revised framework allows scheduled Indian airlines to lock in ATF prices for up to three years through agreements with oil marketing companies (OMCs).

Airlines opting out of the scheme continue to purchase fuel at prevailing market-linked rates.

The one-time budgetary support is being provided to OMCs through a revolving mechanism.

Under the arrangement, participating airlines procure ATF exclusively from designated OMCs for up to three years under memoranda of understanding signed with the involvement of the Ministries of Civil Aviation and Petroleum and Natural Gas.

The government has said that once international fuel prices ease, the differential amount paid under the scheme would be recovered from OMCs and credited back to the Consolidated Fund of India.

ATF is the single largest cost component for airlines, accounting for around 40% of their operating expenses. Changes in jet fuel prices directly affect airline profitability and can influence airfares.

The latest cut also comes at a time when India's aviation industry is under severe financial pressure.

Ratings agency ICRA has projected the sector to post a net loss of ₹36,000-38,000 crore in 2026-27, much higher than its earlier estimate of ₹11,000-12,000 crore.

ICRA has also revised its estimate for industry losses in 2025-26 to ₹32,000-34,000 crore from the earlier projection of ₹17,000-18,000 crore because of foreign exchange losses, slower traffic growth and higher fuel costs.

The agency has lowered its forecast for domestic passenger traffic growth in 2026-27 to 3-6% from 6-8% earlier and cut its estimate for international passenger traffic carried by Indian airlines to 0-3% from 8-10%.

ICRA said the deterioration in the sector's outlook was driven by the impact of the West Asia conflict on passenger traffic, the rupee and fuel prices, although government intervention on ATF pricing had partly cushioned the blow.