India's Domestic Airlines Face Increased Fuel Costs Amid ATF Price Hike

India's domestic airlines are facing increased fuel costs after the state-owned oil marketing companies (OMCs) raised the price of aviation turbine fuel (ATF) by 5.46% or Rs 6.28 per litre on Tuesday.

The price of ATF has been hiked from Rs 115 per litre to Rs 121.28 per litre, marking the second consecutive monthly increase. This move is expected to put pressure on airfares as jet fuel accounts for around 35-40% of an airline's overall operating expenditure in India.

Separately, Mahanagar Gas Ltd (MGL) has increased CNG and domestic PNG prices in Mumbai due to a sharp rise in input gas prices linked to international indices amid the ongoing crisis in the Middle East. CNG prices have been raised by Rs 2 per kg to Rs 88 in Mumbai, while domestic PNG prices have increased by Rs 1 per standard cubic metre (SCM) with the new rates effective from September 1.

The LPG price hike comes after the government fixed maximum cooking gas production targets for individual public- and private-sector refineries and upstream companies. The Petroleum and Natural Gas Ministry specified maximum LPG production levels for 21 refineries and upstream companies, with combined production potential set at 63,810 tonnes a day.