ATF price for overseas flights cut by 27%, no change for domestic ops, Pg13

Key Highlights:

• ATF price for international flights reduced by 27% to approximately $1,100 per kl for June.
• ATF price for scheduled domestic flights remains unchanged for the second consecutive month.
• OMCs are incurring under-recoveries of about Rs 30,000 per kl on domestic ATF sales.
• Indian airlines requested the government to cap jet fuel price hikes and equalize domestic and international prices.

Detailed Insights:

• The price cut for international flights aligns with changes in global benchmark prices, not solely due to airline pressure.
• On April 1, ATF price for domestic flights increased by Rs 15,000 per kl to Rs 1,04,927 per kl, while international flights saw a steeper hike of about Rs 73,000 per kl.
• For May, ATF price for international flights was hiked by $76.55 per kl to $1,511.86 per kl, but domestic prices remained stable.
• Domestic ATF sales are subject to central and state levies, while international sales are treated as exports, leading to price differences.
• Airlines have requested the government to reintroduce “crack spread bands” to limit OMC margins on jet fuel and equalize domestic and international prices.

Key Concepts Involved:

• Aviation Turbine Fuel (ATF): A type of jet fuel used to power aircraft gas turbine engines.
• OMCs (Oil Marketing Companies): Public sector companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum that refine, market, and distribute petroleum products.
• Crack Spread: The difference between the price of crude oil and the petroleum products refined from it, used to determine refining margins.