Did you know the original term for aeroplane fuel is aviation turbine fuel or ATF? The price of aeroplane fuel can be dynamic, and the primary reason behind this is the different factors contributing to the pricing. The type of aeroplane fuel also differs from one type of jet to the other.
Although there are quite a few options in this field, Jet A fuel is one of the most common choices for aeroplane fuel. This one is kerosene based and hence quite a favourable one. The fuel price is quite high, and at the same time, it is increasing every day.
Many factors can contribute to the changes in its price. It is also one of the primary reasons you see a change in the flight ticket price. The current ATF price in India is around Rs. 1.10 lakh per kilolitre (Subject to change).
Factors that Play An Important Role In Deciding The Cost Of Aeroplane Fuel
Many factors can contribute to the changes in its price. Some of them are:
Price of Crude Oil
As we all know, crude oil is one of the most important sources of aeroplane fuel. Hence, it is a given that if there are changes in the price of crude oil, automatically, there will also be an impact on the price of aeroplane fuel.
Many factors play an important role in the change in crude oil prices; the most important ones are global supply, sourcing and inappropriate distribution. If the price of crude oil increases a lot, the fuel for aeroplanes will also increase.
Taxes and Regional Market
We must understand that the taxation system for every country and region is very different, which will also impact fuel prices. The central government in India is the one who is at the heart of deciding on these factors.
Hence, if the government has to pay more for aeroplane fuel then automatically, it will impact the taxes and increase the aeroplane fuel price in India.
Cost of Refining and Distribution
After you have purchased the crude oil, it needs to go through a lot of refining and distribution to meet the standards of aeroplane fuel. The cost behind this refining and distribution is also a major factor in deciding the aeroplane fuel price in India. To refine the crude oil correctly, you need to have a lot of good infrastructure and building and maintaining them takes a lot of work.
After refining the oil, it must be distributed through several channels, which requires an able logistic system. Hence, if this system costs more, the prices of aeroplane fuel will also increase.
This is one of the most common factors. If there is a lot of demand in the market for aeroplane fuel, then the price of the same automatically increases. You will primarily notice that the aeroplane fuel price in India will go upward during vacations, and this is when most people go on holiday. Because the demand for fuel is more and the supply is limited, it will impact the prices.
Another important factor that decides the fuel price in India is the exchange rates. The fuel price is usually quoted in US dollars; hence, the exchange rate plays an extremely important role here.
If there is a fluctuation in the exchange rate, this will also impact the fuel price. For example, if you get an exchange rate much higher than the US dollar, you will need to pay less for fuel. However, if the exchange rate is not promising, i.e. when USD is stronger than Indian Rupee, the aeroplane fuel price will see a major hike.
How often does the aeroplane fuel price in India fluctuate?
As you can understand, the price is completely dependent on the global market. Hence, if there is the slightest fluctuation in the market, it will affect the aeroplane fuel price in India. Considering the global situation and the market rate, it would be safe to say that the price often goes through a revision once in at least two weeks.
Getting information about aeroplane fuel prices in India could be extremely easy with trusted sources. However, it is hard to predict the fuel price as it is an extremely dynamic subject.
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