Senior executives from the domestic carriers told Moneycontrol they negotiated for lower jet fuel prices as part of their yearly contracts with oil marketing companies following a nearly 30 percent fall in the price of crude, from around $95 a barrel in November 2024 to $60 a barrel in March 2025.
This development comes just a day after IndiGo said that it is introducing a fuel charge, which will be effective from October 6 in order to check rising ATF prices.
The decision follows the significant increase in Aviation Turbine Fuel (ATF) prices, which have surged in the last three months with consecutive price hikes every month, the carrier said in a statement
Additionally, air travel expenses are expected to get affected as the Aviation Turbine Fuel (ATF) prices have dropped from 1.12 Lk/kL In Delhi to 1.07 Lk/kL.
"Eight months ago, only 11 states had VAT rate ranging from 1-4 percent and a bulk of the states had rates ranging from 20-30 percent. Now 24 states levy VAT between 1-4 percent only," the minister said.
This is the fourth hike in jet fuel or Aviation Turbine Fuel (ATF) prices in less than two months following a spike in global oil prices but petrol and diesel prices remained unchanged for a record 103rd day in a row, coinciding with electioneering to elect new governments in states like Uttar Pradesh and Punjab.
Aviation minister Jyotiraditya Scindia urged states to reduce the value-added tax (VAT) on aviation turbine fuel (ATF). States have long resisted such calls.
SpiceJet's peers Jet Airways and IndiGo are also facing strong challenges in a market that is marked by huge demand but constrained by poor infrastructure and intense competition keeping fares low.
Kapil Kaul of CAPA expects Jet Airways to turn profitable in the next 12-18 months.
Ajay Singh, Former Director, SpiceJet says getting the right business model for an airline is of utmost importance now as it is getting difficult to run an airline successfully.
The turbulence in the aviation sector has spared one airline - Indigo. The airline is continuing with its 2012 plan of adding nine new aircrafts.
This morning, the aviation space has not been looking great.Vikram Suryavanshi, research analyst of Antique Stock Broking feels high ATF prices will remain a primary challenge for aviation companies. He prefers exposure to SpiceJet among other listed aviation companies.
After two consecutive price cuts, state-owned oil companies today hiked jet fuel, or ATF, price by 2.5% in line with firming of international oil rates.