Indian Oil Corporation Ltd., the nation’s largest fuel retailer, increased the aviation turbine fuel prices for the eleventh straight month, adding to costs of airlines.
The state-run marketer hiked prices by 7 percent over the previous month, the biggest jump in 17 months. Jet fuel will now cost Rs 71,245 per kilolitre on an average across India.
The prices rose as Brent crude, the Asian benchmark, jumped close to 15 percent to $77 per barrel in the last three months. Fuel accounts for more than a third of an airline’s operating costs. IndiGo, India’s largest domestic airline, has already started charging as much as Rs 400 as fuel surcharge on every domestic ticket to offset the impact of costs. Higher ATF prices could impact airlines’ financials in the three months ending June.
Prices average around Rs 67,008 per kilolitre for the ongoing quarter, 27 percent higher than the year-ago period. It’s the highest average quarterly fuel prices in the last three years, according to data compiled by BloombergQuint.
Costlier jet fuel in the March ended quarter had hurt all the three-listed aviation companies. Operating income—or earnings before interest, tax, depreciation and amortisation and rental cost—and net profit declined for the top two domestic airlines. Spicejet Ltd. was less impacted because of the rise in fares and higher treasury income.
Fuel costs, on an average, increased by more than 30 percent compared with the year-ago period for all three. Fuel cost per available seat kilometre was at a three-year high.