The reduction in the price of 19 kg commercial LPG cylinders in the beginning of August has given some reassurance to traders. However, domestic airlines have received a big shock. Since August 1, the price of Aviation Turbine Fuel (ATF) i.e. aviation fuel has increased by Rs 5 per liter. After this increase, the ATF rate for domestic flights has increased from Rs 110 per liter to Rs 115 per liter. ATF is the largest part of the operating expenses of any airline. Generally, 35 to 40 percent of the total operating expenses of an airline are spent on fuel alone. In such a situation, due to ATF becoming expensive, the expenses of the airlines will increase, which will directly impact their earnings and profits.
Will flight tickets become expensive?
After the increase in fuel prices, additional expenses will be imposed on the airlines. If the increased cost of ATF continues for a long time, then the companies may ask the passengers to bear some of it, i.e. increase the ticket prices. So, the decision to increase the ticket prices will depend entirely on the business strategy of the airline and the demand in the market.
What is ATF?
ATF (Aviation Turbine Fuel) is a special fuel that is used to fly aircraft. Changes in its price directly affect the operating costs of the airlines. For this reason, everyone keeps an eye on the shares and airfares of companies in the aviation sector when ATF prices increase or decrease. If ATF prices continue to increase continuously, then airlines may have to take steps like changing fares, cutting route management and other expenses to control costs. On the other hand, if crude oil prices decrease in the coming days, then ATF prices are also likely to decrease again.
