Air travel set to get costlier- Know why

New Delhi: Aviation turbine fuel (ATF) price was Friday hiked by 5.5 percent for the fifth month in a row, but that of non-subsidised cooking gas (LPG) was cut by Rs 11 per cylinder, in line with global trends.

ATF, or jet fuel price, in Delhi was increased by Rs 2,557.7 per kilolitre (kl), or 5.47 percent, to Rs 49,287.18, the oil companies announced today.

This is the fifth straight monthly increase in rates -- the last being on June 1 when prices were hiked by a steep 9.2 percent, or Rs 3,945.47, to Rs 46,729.48/kl.

In the five increases, ATF rates have gone up by 25 percent, or Rs 9,985.87, per kl since March. But the fuel used in aeroplanes is still cheaper than petrol and diesel.

A litre of petrol in Delhi costs Rs 64.76 a litre and diesel is priced at Rs 54.70 compared with Rs 49.28 a litre price of ATF. This is mainly because the government took away most of the gains arising out of the drop in international oil prices by way of raising excise duties on auto fuels.

ATF rates vary at different airports because of differential local sales tax or value-added tax (VAT).

Jet fuel constitutes over 40 percent of an airline's operating cost and the latest price increase will add to the financial burden of cash-strapped carriers.

No immediate comment was available from airlines on the impact of the price increase on passenger fares.

Simultaneously, the oil firms cut prices of non-subsidised LPG, which consumers buy after exhausting their quota of 12, by Rs 11 per 14.2-kg cylinder.

Non-subsidised cooking gas (LPG) now costs Rs 537.50 in Delhi as against Rs 548.50 per cylinder previously.

The reduction in rates comes on back of two successive increases - first by Rs 18 per cylinder on May 1 and then by Rs 21 per bottle on June 1.

Subsidised LPG costs Rs 421.16 per 14.2-kg cylinder in Delhi.

The three fuel retailers -- Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum -- revise jet fuel and non-subsidised LPG prices on the first day of every month, based on the average international price in the preceding month.