Aviation Fuel Prices Rise 1% as Commercial LPG Sees Marginal Cut

Aviation Turbine Fuel (ATF) prices have been increased by approximately 1%, or Rs 777 per kilolitre, reaching Rs 94,543.02 per kl in Delhi. This marks the second consecutive monthly rise in ATF rates. This increase is expected to raise the financial burden on commercial airlines, as fuel accounts for nearly 40% of their operational costs. ATF prices in other major cities like Mumbai, Chennai, and Kolkata have also seen hikes. Prices differ across cities due to varying local taxes like VAT.

Concurrently, the price of commercial LPG, used by hotels and restaurants, has been reduced by Rs 5 per 19-kg cylinder, bringing its price in Delhi to Rs 1,590.50. This follows a previous increase and several earlier reductions.

Prices for domestic LPG cylinders used in households remain unchanged, and petrol and diesel prices continue to be frozen. State-owned companies like Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd revise these prices monthly based on international fuel prices and foreign exchange rates.

Impact: The hike in ATF prices will increase the operating costs for airlines, potentially affecting their profitability and ticket prices. The reduction in commercial LPG offers a minor relief to businesses in the hospitality sector. The unchanged domestic fuel prices aim to maintain stability for household consumers and vehicle owners. Overall market impact is moderate, affecting specific listed companies and sectors.

Impact Rating: 6/10

Heading Difficult terms: * **Aviation Turbine Fuel (ATF)**: A specialized type of jet fuel used in aircraft powered by gas-turbine engines. * **Kilolitre (kl)**: A unit of volume equivalent to 1,000 litres. * **Value Added Tax (VAT)**: A consumption tax imposed by the government on goods and services sold within a country, based on the value added at each stage of production and distribution. * **Commercial LPG**: Liquefied Petroleum Gas sold in cylinders for industrial or commercial purposes, such as for use in hotels, restaurants, and small industries. It is distinct from domestic LPG in its cylinder size and pricing structure. * **Global Benchmarks**: International reference prices for commodities, such as crude oil or refined fuels, that serve as a basis for pricing in other markets. * **Foreign Exchange Rate**: The value of one country's currency expressed in terms of another country's currency, impacting the cost of imported goods and services. * **Operating Cost**: The expenses incurred by a business in its normal day-to-day operations.