Expert Narendra Taneja has advised caution regarding the Government of India’s new Aviation Fuel (ATF) harmonization scheme. Speaking on the Business Today TV programme, he said aviation turbine fuel (ATF) prices should remain in line with real-time market conditions. He believes that in a country like India, where about 90% of energy needs are met by imports, controlling prices artificially will not be the right strategy in the long term.
Narendra Taneja said India should give the market a chance to play a bigger role. According to him, the country will also have to review its transportation and aviation policies so that Indian airlines can compete globally and create a strong network.
ATF is a significant cost for airlines
ATF is one of the biggest expenses for airlines, Taneja said. In such a situation, instead of looking at fuel prices separately, it is important to understand the economic situation of the entire aviation sector.
He says India’s aviation sector is not yet fully balanced. A few large companies dominate the market and airlines constantly face profitability challenges. In such a situation, if an attempt is made to keep prices artificially stable, this may provide relief for a short period, but may affect the correct assessment of operating costs and actual costs of the business.
Not just the ATF, the whole energy policy issue
Taneja linked jet fuel prices to the country’s broader energy policy. He said that India’s demand for oil may rise to 8 million barrels per day from 5.5 to 5.8 million barrels per day currently in the coming years.
He said that when the country imports nearly 90% of its energy needs, the role of the market becomes more important. According to him, market-based pricing of imported energy sources such as oil, gas and LPG has become the need of the hour.
Help should be given to those in need, not to everyone
Narendra Taneja clarified that he is not talking about ending the role of the government. He said that instead of providing blanket subsidies or relief to all consumers, targeted assistance should be provided to those in need.
“Protect those who need protection. But in other matters, let the forces of demand, supply and market work,” he said.
Taneja believes that the ongoing discussion about ATF standardization is not limited to the aviation sector alone. This links to the larger question of how India sets its energy prices amid rising energy demand, global uncertainty and geopolitical risks.
