Airlines may get nod to hedge ATF for local flights

The finance ministry is considering a proposal from domestic airlines for permission to hedge aviation turbine fuel (ATF) consumed for domestic flights. While domestic carriers are allowed to hedge ATF for their international operations, the government does not permit them to do so for domestic operations.

Since ATF accounts for almost 40% of airlines’ total costs, airlines could save significantly in their domestic operations if hedging of ATF was allowed. Most airlines are confident that they could at least keep costs under control. Air India, for example, uses hedging to keep a check on fuel costs in the cost of international operations.

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