Commercial LPG cylinder prices have been slashed by ₹192, bringing relief to hotels and restaurants, while a ₹5-per-litre hike in jet fuel rates is set to raise operating costs for airlines.
State-run oil marketing companies have cut the price of commercial LPG cylinders by a sharp ₹192 for a 19-kg unit, even as jet fuel rates were raised by ₹5 per litre in the latest monthly revision. The changes, which took effect over the weekend, reflect the diverging movement of international benchmark rates that oil companies track while setting domestic prices.
A 19-kg commercial LPG cylinder in Delhi now costs ₹2,738, down from ₹2,930 earlier. Commercial cylinders, unlike the subsidised domestic ones used in most households, are meant for establishments such as hotels, restaurants, and catering businesses, and their prices are far more sensitive to swings in global fuel markets since they carry no government subsidy cushion.
This marks the second consecutive monthly reduction in commercial LPG rates, following a similar cut that was implemented on July 1. Alongside the 19-kg cylinder, the price of the smaller 5-kg commercial cylinder was also trimmed, falling to ₹762 from ₹808.50.
The relief comes after a punishing few months for businesses that rely on commercial LPG. Following the outbreak of conflict in late February, rates had climbed steeply, rising by nearly ₹1,373 for a 19-kg cylinder, from ₹1,740.50 in February to ₹3,113.50 by June, as global supply disruptions pushed prices to record highs. The back-to-back cuts in July and August offer some respite, though rates remain well above pre-crisis levels.
Aviation turbine fuel (ATF) moved in the opposite direction. Jet fuel now costs ₹115 per litre after the ₹5 hike, reversing part of the reduction that had been carried out earlier. Because ATF makes up a substantial share of an airline's operating costs, even modest per-litre changes can influence ticket pricing and route profitability, particularly for carriers already operating on thin margins.
Both LPG and ATF prices are revised on the first of every month by oil marketing companies, based on a formula linked to international benchmark rates and foreign exchange movements. This monthly cycle explains why commercial LPG and jet fuel often move in different directions within the same revision, as they are priced against different global benchmarks and demand cycles. Domestic subsidised LPG cylinders, used by most Indian households, follow a separate pricing mechanism and were not part of this revision.
It is worth noting that these rates, quoted here for Delhi, vary from state to state. Local taxes such as value-added tax (VAT) are levied separately by state governments, so the same cylinder or the same litre of jet fuel can cost differently just across a state border. Consumers and businesses in other cities should expect the exact figures to differ even as the direction of change, a cut in commercial LPG and a hike in ATF, holds nationally.
For the hospitality and food service industry, which depends heavily on commercial LPG for daily operations, the reduction is likely to ease cost pressures that had built up since the February price surge. Establishments running on tight margins, particularly smaller restaurants and catering units, had been forced to either absorb the higher fuel costs or pass them on to customers through pricier menus. A second straight month of cuts may allow some of that pressure to unwind, though the sector remains a long way from the rates seen before the crisis began.
Airlines, on the other hand, will have to contend with a fresh rise in operating costs just as fuel expenses form one of the largest line items in their budgets. Whether the ₹5 increase per litre translates into higher airfares will depend on how individual carriers manage their overall cost structure and the level of competition on specific routes.
The next revision in LPG and ATF rates is expected on the first of the coming month, when oil marketing companies will again recalibrate prices based on the latest international trends.
State-run oil marketing companies have cut the price of commercial LPG cylinders by a sharp ₹192 for a 19-kg unit, even as jet fuel rates were raised by ₹5 per litre in the latest monthly revision. The changes, which took effect over the weekend, reflect the diverging movement of international benchmark rates that oil companies track while setting domestic prices.
A 19-kg commercial LPG cylinder in Delhi now costs ₹2,738, down from ₹2,930 earlier. Commercial cylinders, unlike the subsidised domestic ones used in most households, are meant for establishments such as hotels, restaurants, and catering businesses, and their prices are far more sensitive to swings in global fuel markets since they carry no government subsidy cushion.
This marks the second consecutive monthly reduction in commercial LPG rates, following a similar cut that was implemented on July 1. Alongside the 19-kg cylinder, the price of the smaller 5-kg commercial cylinder was also trimmed, falling to ₹762 from ₹808.50.
The relief comes after a punishing few months for businesses that rely on commercial LPG. Following the outbreak of conflict in late February, rates had climbed steeply, rising by nearly ₹1,373 for a 19-kg cylinder, from ₹1,740.50 in February to ₹3,113.50 by June, as global supply disruptions pushed prices to record highs. The back-to-back cuts in July and August offer some respite, though rates remain well above pre-crisis levels.
Aviation turbine fuel (ATF) moved in the opposite direction. Jet fuel now costs ₹115 per litre after the ₹5 hike, reversing part of the reduction that had been carried out earlier. Because ATF makes up a substantial share of an airline's operating costs, even modest per-litre changes can influence ticket pricing and route profitability, particularly for carriers already operating on thin margins.
Both LPG and ATF prices are revised on the first of every month by oil marketing companies, based on a formula linked to international benchmark rates and foreign exchange movements. This monthly cycle explains why commercial LPG and jet fuel often move in different directions within the same revision, as they are priced against different global benchmarks and demand cycles. Domestic subsidised LPG cylinders, used by most Indian households, follow a separate pricing mechanism and were not part of this revision.
It is worth noting that these rates, quoted here for Delhi, vary from state to state. Local taxes such as value-added tax (VAT) are levied separately by state governments, so the same cylinder or the same litre of jet fuel can cost differently just across a state border. Consumers and businesses in other cities should expect the exact figures to differ even as the direction of change, a cut in commercial LPG and a hike in ATF, holds nationally.
For the hospitality and food service industry, which depends heavily on commercial LPG for daily operations, the reduction is likely to ease cost pressures that had built up since the February price surge. Establishments running on tight margins, particularly smaller restaurants and catering units, had been forced to either absorb the higher fuel costs or pass them on to customers through pricier menus. A second straight month of cuts may allow some of that pressure to unwind, though the sector remains a long way from the rates seen before the crisis began.
Airlines, on the other hand, will have to contend with a fresh rise in operating costs just as fuel expenses form one of the largest line items in their budgets. Whether the ₹5 increase per litre translates into higher airfares will depend on how individual carriers manage their overall cost structure and the level of competition on specific routes.
The next revision in LPG and ATF rates is expected on the first of the coming month, when oil marketing companies will again recalibrate prices based on the latest international trends.
Leave a Comment