In a mixed bag for India's fuel consumers, state-owned oil marketing companies announced a price reduction for commercial cooking gas on Monday, while simultaneously increasing the cost of aviation turbine fuel (ATF). This dual move provides relief to the hospitality sector but piles fresh pressure on airlines already grappling with high operational costs.
Relief for Hotels and Restaurants
The key announcement for businesses was a Rs 10 per cylinder cut in the price of commercial LPG. With this revision, the cost of a standard 19-kg commercial LPG cylinder in the national capital now stands at Rs 1,580.50. This marks the second consecutive monthly decrease, following a Rs 5 reduction on November 1.
This series of cuts has significantly benefited commercial users like hotels, restaurants, and caterers since April. Over this period, there have been six separate reductions, culminating in a cumulative price cut of Rs 223 per cylinder. This effectively balances out the Rs 15.50 increase that was imposed back in October.
It is important to note that prices for domestic LPG cylinders, used in households, remain unchanged. The rate for a 14.2-kg cylinder continues to be Rs 853, a price held steady since a Rs 50 hike in April of this year.
Aviation Sector Faces Soaring Fuel Costs
While the hospitality sector breathes easier, the aviation industry is bracing for renewed financial strain. For the third month in a row, the price of Aviation Turbine Fuel (ATF) has been increased. In Delhi, ATF prices have risen by 5.4% to Rs 99,676.77 per kilolitre.
This follows hikes of approximately 1% in November and 3.3% in October, indicating a persistent upward trend. Given that jet fuel typically constitutes nearly 40% of an airline's total operating expenses, this sustained increase is a major concern for carriers.
The revised ATF rates vary across major metros due to differences in local taxes:
- Mumbai: Rs 93,281.04 per kilolitre
- Chennai: Rs 1,03,301.80 per kilolitre
- Kolkata: Rs 1,02,371.02 per kilolitre
Monthly Revisions and Unchanged Petrol-Diesel Prices
The pricing adjustments for both LPG and ATF are carried out on the first day of every month by the three public sector oil giants: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL). These revisions are based on a formula linked to international benchmark prices and foreign exchange rates.
In contrast to the movement in LPG and ATF, the prices of petrol and diesel have been kept stable nationwide. They have remained frozen since a Rs 2 per litre cut was implemented in March last year. In Delhi, petrol continues to retail at Rs 94.72 per litre, while diesel is priced at Rs 87.62 per litre.
The latest fuel price dynamics underscore the contrasting challenges faced by different segments of the Indian economy. While commercial enterprises reliant on LPG get some cost respite, the aviation sector must navigate the turbulent skies of rising input costs, which could potentially impact airfares in the future.
