Jet fuel price hiked by nearly one per cent

India's largest fuel retailer Indian Oil announced a 0.81% increase in the price of jet fuel in New Delhi region, effective from Saturday midnight.

According to IOC, the aviation turbine fuel (ATF) will cost airlines 0.81% more at New Delhi - Rs74,204.74 per kilolitre from Rs73,607.26 per kilolitre.

The fuel price difference in other major cites will be decided by factoring in the state tax regimes applicable.

The three state-owned oil marketing companies (OMCs), which revise jet fuel prices on the first day of every month, had reduced ATF price by 4.51% on October 31, 2013, a month after hiking prices by a massive 6.9% for purchases from September 1.

Fuel prices are a determining factor in the tough Indian aviation sector as the cost comprises about 50% of the total operating costs of an airline.

High prices have dented the sector as major airlines bleed under the high state sales tax regime which ranges from 4-34%.

Currently, ATF sold in the country is nearly 50-60% costlier than in overseas markets like Bangkok, Singapore or Dubai.

There has been a longstanding perception that ATF, which is a super-refined form of kerosene, should not be subsidised for air travel.

The government currently subsidises sensitive products like diesel, LPG (liquefied petroleum gas) cylinders and kerosene.

Currently, the central government is trying to get the fuel as a notified category item. Once listed as a notified product or a declared good under the Central Sales Tax (CST) Act, airlines will only have to pay a uniform sales tax of four per cent.