Indian Government Increases Jet Fuel Price to Rs 115/Litre

In New Delhi, the Indian government has announced a ten per cent increase in jet fuel prices, now set at ₹115 per litre, up from ₹104.927. This adjustment comes as part of a new government-led price stabilisation scheme aimed at protecting both air carriers and passengers from significant fluctuations in global oil prices.

Airlines that choose to join the stabilisation programme will benefit from this locked-in rate for up to three years. In contrast, those that opt out will be subject to market-linked pricing, which currently stands at approximately ₹142 per litre, similar to the rates faced by international carriers.

An industry source explained that the scheme is voluntary, allowing airlines to decide their participation. "Those opting into the price stabilisation scheme will continue to receive jet fuel at ₹115 per litre, insulated from global benchmark fluctuations. Non-participating carriers may enjoy lower costs during price declines but face potentially higher expenses when international rates increase," the source noted.

The structure involves a free-on-board (FOB) benchmark price of ₹86.32 per litre for those participating, with additional charges for airport operations, oil company margins, and applicable taxes. This leads to an effective selling price of ₹115 in Delhi, ₹114.5 in Mumbai, and ₹139 in Chennai.

Previously, the price in Delhi had remained under ₹105 per litre for over two months, following a partial allowance for higher global fuel costs stemming from geopolitical issues in West Asia. Earlier this year, international jet fuel prices surged to ₹142 per litre from pre-war levels of just ₹60.50 per litre, raising concerns about rising operational costs and possible fare increases for airlines.

It is important to clarify that the new price framework is not a subsidy, but rather a temporary measure designed to mitigate price volatility while ensuring accountability and full recovery of funds. Oil marketing companies (OMCs) have been facing losses due to the previous freeze in fuel prices, similar to challenges observed in other fuel sectors such as petrol and diesel.

In response to these losses, the Indian Union Cabinet has authorised a ₹10,000-crore price stabilisation scheme aimed at containing jet fuel prices and shielding airlines from volatility associated with geopolitical tensions. Under this initiative, the government will provide interest-free advances to oil marketing companies whenever global prices exceed ₹86.32. If prices decline, those excess funds will be recouped from the companies to the consolidated fund of India.