ISLAMABAD – The government on Saturday reduced the price of jet fuel by Rs23 per litre following easing tensions in the Middle East. A day earlier, the government had slashed the price of high-speed diesel (HSD) by up to Rs32.12 per litre. Prime Minister Shehbaz Sharif approved the reduction in HSD price on Friday from Rs385.54 to Rs353.43 per litre.
According to a notification issued by Pakistan State Oil (PSO), the new rate for jet fuel stood at Rs471.01 per litre, while kerosene oil was priced at Rs428.81 per litre. The revision reflects changes in global oil prices and exchange rate fluctuations. The adjustment is expected to provide some relief to the aviation sector, which has been facing high operational costs due to elevated fuel prices.
Context of the Reduction
The latest reduction came after a sharp surge in jet fuel prices last month, when rates climbed to a record Rs476.97 per litre following multiple increases within weeks. Authorities had cited the global oil crisis triggered by the US–Iran conflict, with prices rising by Rs288 per litre since the start of March.
Impact on Airfares
The spike in aviation fuel costs significantly raised operational expenses for airlines, prompting a steep increase in airfares. One-way domestic tickets on key routes such as Karachi, Lahore and Islamabad surged to as high as Rs40,000, while “chance seat” fares crossed Rs50,000.
International travel was also affected, with economy class fares to destinations including the Middle East, Europe and North America raised to between Rs300,000 and Rs700,000, reflecting the broader impact of fuel price volatility on the aviation sector.
Hope for Further Relief
The reduction in jet fuel price, while modest, offers hope that airfares may begin to decrease. However, the price of jet fuel remains significantly higher than before the war. A sustained reduction will depend on the durability of the ceasefire and the full reopening of the Strait of Hormuz.
Analysis: A Welcome but Modest Relief
The Rs23 per litre reduction in jet fuel price is welcome news for Pakistan’s aviation sector, which has been battered by soaring fuel costs. However, at Rs471.01 per litre, jet fuel remains far above pre-war levels.
The aviation sector is particularly sensitive to fuel prices, as fuel is the single largest operating cost for airlines. The sharp increase in airfares — with domestic tickets reaching Rs40,000 — has made air travel unaffordable for many.
The reduction in diesel prices is also significant, as diesel is used in freight transport and agriculture. Lower diesel prices should help reduce transportation costs and, eventually, food prices.
As the ceasefire holds and the Strait of Hormuz remains open, further price reductions may follow. For now, the government has taken a step in the right direction.
