Flight Fuel Gets Cheaper: ATF Prices Cut By Rs 5 Per Litre, Will Airfares Drop?

Domestic airlines will pay less for aviation fuel from July 1 after state-run oil marketing companies (OMCs) reduced Aviation Turbine Fuel (ATF) prices in their latest fortnightly revision. The price has been lowered by Rs 5 per litre, taking the domestic ATF rate to Rs 110 per litre.

The reduction comes as international crude oil and jet fuel prices have softened in recent weeks following an easing of geopolitical tensions in West Asia and the resumption of shipping through the Strait of Hormuz.

Fuel Costs Ease After Months of Volatility

ATF prices have remained volatile over the past few months as the conflict in West Asia pushed global crude oil prices higher and increased pressure on aviation fuel costs.

In March, the government reintroduced the Special Additional Excise Duty (SAED), commonly referred to as the windfall tax, which affected ATF pricing. Domestic ATF prices were subsequently revised upwards in April, while international airlines continued to purchase fuel at market-linked rates. During this period, oil companies were selling fuel to domestic carriers below cost, resulting in financial losses.

According to the latest monthly price review by OMCs, the decline in global fuel prices has now allowed a reduction in domestic ATF rates.

Relief for Airlines, But Airfares May Not Fall Immediately

Aviation fuel remains one of the largest operating expenses for airlines, accounting for nearly 40 per cent of overall costs.

The latest reduction is expected to provide some relief to carriers, particularly as the sector continues to manage fluctuating fuel costs. However, industry experts say the lower ATF price does not automatically translate into cheaper air tickets.

Airfares are influenced by several factors beyond fuel costs, including passenger demand, seasonal travel patterns and route-specific pricing.

Also Read : Nayara Cuts Petrol, Diesel Prices From July 1: Check Fuel Rates In Your City

Govt Earlier Approved Price Stabilisation Mechanism

The government had earlier approved an ATF Price Stabilisation Fund aimed at reducing the impact of sharp fuel price swings on domestic airlines.

The latest cut follows a broader moderation in international oil prices, which have retreated from highs seen during the peak of geopolitical tensions.

Export Duty Structure Revised From July 1

Separately, the government has also revised windfall taxes on petroleum exports with effect from July 1, according to a government notification.

The export duty on diesel has been reduced to Rs 8.5 per litre from Rs 14 per litre, while the levy on ATF exports has been lowered to Rs 7.5 per litre from Rs 12.5 per litre.

At the same time, the export duty on petrol has been increased to Rs 4 per litre from Rs 1.5 per litre to help ensure adequate domestic supplies.

The revised duty structure follows a decline in global crude oil prices after concerns over prolonged supply disruptions eased with the reopening of shipping routes through the Strait of Hormuz.

According to analysts and economists cited by Reuters, Brent crude is now expected to average $84.50 per barrel in 2026, lower than the previous forecast of $90.44 per barrel.

The government has also expanded exemptions from export levies for public sector oil companies. In addition to Nepal, Bhutan, Bangladesh and Sri Lanka, exports to Mauritius and the Maldives will now also be exempt from these duties.

Next Fuel Price Review Due Mid-July

Oil marketing companies revise ATF prices on the 1st and 16th of every month. Any further changes will depend on movements in international crude oil and aviation fuel prices over the coming weeks.

Also Read : Commercial LPG Cylinder Gets Cheaper By Rs 183.50; Domestic Rates Unchanged

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