With the ongoing tension in the Middle East causing a global surge in fuel prices, the Indian government stepped in to cushion domestic airlines from being affected. On Tuesday the Indian Oil Corporation had increased aviation turbine fuel (ATF) prices to Rs 2.07 lakh per kilolitre starting today. But due to government intervention, the price hike was revised within an hour and lowered to Rs 1.04 lakh per kilolitre.

This move came after projections showed a possibility of a 100 percent increase in domestic ATF prices from April 1. In order to shield a sudden increase in airfares, Centre has allowed a partial pass-through of global price hike.

Staggered Fuel Price Increase to Keep Airfares in Check

According to the new mechanism, the price will increase in a staggered manner. The public sector oil marketing companies will consult with the Ministry of Civil Aviation and implement this. A limited increase in domestic airline fares is expected, around 25 percent (Rs 15 per kilolitre). On the other hand, airlines operating on international routes won’t get similar relief; they will pay according to global benchmarks.

Sharing thoughts on this strategy, Civil Aviation Minister Ram Mohan Naidu said this approach is primarily taken to maintain stability in the aviation sector and protect passengers from steep fare hikes. “This measured strategy will ease pressure on airlines, keep fares in check, and ensure uninterrupted connectivity, which is vital for trade and logistics,” Naidu noted.

Why is the fuel price increasing?

The increase in fuel prices is directly linked to the current war situation in the Middle East. The war, which started on February 28, escalated without any agreement. From targeted attacks on crucial energy infrastructure and disturbances at the Strait of Hormuz, an important route that handles 20 per cent of global oil and gas shipments.

This has affected the global fuel market and pushed up the cost for airlines globally. Many air carriers operating across Asia-Pacific, from Vietnam to New Zealand, have cancelled flights because they cannot manage the operating cost. At the same time China has stopped fuel exports to maintain stock for its domestic energy needs.

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