Commercial LPG up 10%; Govt limits domestic ATF hike to curb airfare surges

The Indian economy is currently navigating significant volatility in energy markets, as evidenced by recent price adjustments for commercial Liquefied Petroleum Gas (LPG) and Aviation Turbine Fuel (ATF). On April 1, 2026, state-owned oil marketing companies implemented a substantial increase in the price of 19-kilogram commercial LPG cylinders, along with a 'calibrated' hike in ATF rates for domestic airlines. These decisions reflect the ongoing impact of global geopolitical tensions, particularly the conflict in West Asia, which has driven up international crude oil and gas prices. Commercial LPG cylinder prices saw an increase of Rs 195.50 across metropolitan cities. In Delhi, the price of a 19-kg commercial LPG cylinder rose from Rs 1,883 to Rs 2,078.50, marking an approximate increase of 10.38%. This hike is significant for businesses, especially those in the hospitality sector like restaurants and hotels, which are major consumers of commercial LPG. The surge in prices has led to fears among traders about its potential impact on food costs and operational expenses. The Ministry of Petroleum and Natural Gas attributed this increase to a substantial 44% surge in the Saudi Contract Price for LPG, from 542 US dollars/Metric Tonne in March to 780 US dollars/Metric Tonne for April. This escalation is largely due to disruptions in global LPG supplies, with 20-30% reportedly stuck in the Strait of Hormuz, a critical shipping route. It's important to note that this is the second commercial LPG price hike in recent weeks, following an increase of Rs 114.50 per cylinder on March 1. While commercial LPG prices have been deregulated and are market-determined, revised typically on a monthly basis, domestic LPG cylinder prices (14.2 kg) have remained unchanged, providing relief to household consumers. The government highlighted that domestic LPG prices in India remain among the lowest globally, compared to countries like Pakistan, Sri Lanka, and Nepal. Oil Marketing Companies (OMCs) are currently incurring significant under-recoveries, estimated at Rs 380 per cylinder, with cumulative losses potentially reaching approximately Rs 40,484 crore by the end of May. The government and public sector undertakings (PSUs) absorbed a total of Rs 60,000 crore in losses last year to shield Indian citizens from high international LPG prices. Concurrently, the prices of Aviation Turbine Fuel (ATF) for domestic airlines also saw an adjustment. Against a backdrop where global jet fuel prices soared by over 100% due to the West Asia conflict, the Indian government implemented a 'calibrated' increase, limiting the hike for domestic scheduled carriers. While the Ministry of Petroleum and Natural Gas announced a 'calibrated 25 per cent increase', the actual month-on-month increase in ATF prices for domestic airlines was approximately 8.5% to 8.6%. In Delhi, the retail selling price of ATF rose by Rs 8,289.04 per kilolitre, taking the price to Rs 1,04,927.18 per kilolitre from Rs 96,638.14 in March. This intervention by the government was crucial, as a full pass-through of global price surges would have resulted in more than a 100% hike, potentially leading to an 'industry-wide crisis' for Indian carriers. The Ministry of Civil Aviation stated that this partial and staggered increase provides 'critical relief' and ensures that domestic operational costs for Indian carriers remain manageable. Fuel typically accounts for nearly 40% of the total operating expenses for Indian airlines, making any significant price fluctuation a major concern for the aviation sector. The move aims to protect air travellers from immediate steep increases in fares driven by fuel surcharges and maintain competitive pricing for domestic travel. In stark contrast, foreign and non-scheduled operators faced a much steeper hike, with prices rising by over 114% to Rs 2,07,341.22 per kilolitre. This distinction underscores the government's strategic approach to insulate the domestic aviation sector and consumers from the full brunt of global energy price volatility. The government has previously intervened by cutting excise duties on petrol and diesel to contain retail prices, demonstrating a broader strategy to absorb part of the global crude price shock. Despite the current increases, premium petrol and diesel variants also saw price adjustments, while regular fuel rates remained unchanged. These price revisions highlight the delicate balance the Indian government and oil marketing companies are attempting to strike between market realities driven by international events and the need to protect domestic consumers and industries from excessive financial burdens. The situation remains dynamic, with continued monitoring of global energy markets and their implications for India's energy landscape.

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