Govt OMCs Hike Jet Fuel By 10% To ₹115/Litre Under New Price Stabilisation Scheme

New Delhi: Even with the government’s price stabilisation scheme for shielding air carriers and passengers from sharp swings in global oil prices, government-owned fuel retailers on Tuesday hiked jet fuel or aviation turbine fuel (ATF) prices around 10 per cent for the airlines. Now, jet fuel for domestic airlines will now cost Rs 115 per litre, up from Rs 104.927, according to an industry source.

The new rate will be locked in for up to three years for airlines that opt to participate in the government-backed price stabilisation scheme. However, airlines that do not opt for the scheme will pay market-linked prices, which are currently around Rs 142 per litre, similar to international carriers.

The source further said that the scheme is completely voluntary, and airlines will have to take a call if they want to participate in it. “Those opting into the price stabilisation scheme will continue to receive ATF at Rs 115 per litre, insulated from global benchmark fluctuations. While non-participating carriers will benefit from price declines, they will also face higher costs when international rates rise,” it said.

Under the voluntary scheme, industry expert said that participating airlines will pay a fixed free-on-board (FOB) benchmark price of Rs 86.32 per litre, plus airport charges, oil company margins and applicable taxes, resulting in an effective selling price of Rs 115 per litre in Delhi, Rs 114.5 in Mumbai and Rs 139 in Chennai.

The new rate compares with a below-market level of about Rs 105 per litre in Delhi, which had remained unchanged for more than two months after the government allowed only a partial pass-through of higher global fuel costs triggered by the outbreak of the West Asia conflict in late February.

However, the source said that international jet fuel prices had climbed to as high as Rs 142 per litre in May from pre-war rates of Rs 60.50 per litre, raising concerns over airline operating costs and potential fare increases. “The new arrangement is not a subsidy but a temporary stabilisation framework intended to smooth volatility in fuel prices while ensuring accountability, monitoring and full recovery of funds,” the source said.

The freeze had led to losses for oil marketing companies (OMCs) on ATF prices, similar to pressures seen in the prices for petrol, diesel, LPG and other fuel segments. To address these losses, the Union Cabinet approved a Rs 10,000-crore price stabilisation scheme aimed at capping ATF prices and shielding airlines from volatility linked to geopolitical tensions, while also supporting the financial health of state-owned oil companies.

Under the scheme, whenever global benchmark prices rise above the base rate of Rs 86.32, the government will provide an interest-free advance to oil marketing companies to cover the difference. When prices fall, the differential will be recovered from the companies and returned to the consolidated fund of India.