CHENNAI: Oil Marketing Companies (OMC) on Sunday implemented the third consecutive price hike in Aviation Turbine Fuel (ATF), increasing rates by a sharp 6 per cent on the backs of strengthening global crude prices.
Since August, Indian OMCs have hiked prices once a month, pushing ATF prices up by a cumulative 12.8 per cent: from `47,013 at the end of July to `53,045 currently. While airfares have stayed steady over the past three months, the hikes are likely to force airlines to revise airfares upwards.
Airlines are set to take substantial hits to their margins over the October-December if prices do not soften again. Analysts have warned of threatened margins over the last month. JM Financial Services in a research note released September 21 stated that “at the current crude price of $56 per barrel (bbl) and USD rate of `64.8, aviation stocks have limited upside”.
SBICAP Securities observed that the increase in prices and rupee depreciation has raised concerns regarding profits and that “if crude prices ($58/barrel) and rupee ( `66/$) sustain at these levels airlines would need to hike passenger fares by 5-6 per cent over last year to maintain unit profitability.”
Non-subsidised LPG price hiked by `1.50
Also, subsidised cooking gas price was hiked by `1.50 per cylinder. A subsidised 14.2-kg LPG cylinder will from today cost `488.68 in Delhi as against `487.18 earlier, IOC said. A 14.2-kg LPG cylinder was priced at `419.18 in June 2016.