Hike in jet fuel prices: Operating costs of airlines increase significantly

A steep surge in jet fuel prices has significantly increased operating costs for Pakistani airlines, with officials warning that the current fuel pricing structure risks eroding the competitiveness of the country’s aviation sector and diverting international traffic to foreign carriers.

The issue came under discussion during a meeting of the Cabinet Committee constituted by the prime minister to monitor fuel prices in light of the emerging regional situation. Finance Minister Muhammad Aurangzeb chaired the meeting on Monday. Sources said that the committee was informed that the price of Jet-A1 fuel has jumped from around Rs 166 per litre to about Rs290 per litre, marking an increase of roughly 75 percent.

Aviation fuel accounts for 30–40 percent of airline operating costs, meaning the sharp increase has significantly altered the cost structure of Pakistani carriers.

Officials told the committee that airlines are unable to immediately pass on the higher costs to passengers because tickets are often sold several months in advance, limiting their ability to adjust fares in the short term.

During the meeting it was also highlighted that foreign airlines enjoy a competitive advantage as they benefit from lower fuel prices at their home hubs, fuel hedging strategies, and extensive international networks.

It warned that without mitigating policy measures, the prevailing jet fuel pricing framework could damage Pakistan’s aviation industry and shift international traffic towards foreign airlines, undermining the viability of local carriers.

An official statement issued by the Finance Division noted that during the meeting, the Committee took note of operational issues raised by stakeholders from the aviation and logistics sectors and directed the relevant authorities to undertake a detailed review of the matter and present a comprehensive assessment at the next meeting

The Committee continued its daily review of developments in the energy sector and assessed national preparedness measures in light of the evolving regional situation. It deliberated on the evolving regional and global energy situation and undertook a detailed review of petroleum product stock positions across the country. A comprehensive briefing was presented on the current national inventory of crude oil and refined petroleum products, ongoing import arrangements, and supply chain logistics, including shipments currently en-route and additional cargoes being arranged to strengthen national reserves.

The Committee noted with satisfaction that petroleum product stocks remain at comfortable levels and supply chains are functioning smoothly, with multiple cargoes and import arrangements in place to ensure continuity of supply in the coming weeks.

Members were also briefed on recent trends in global crude and refined petroleum product prices, which have witnessed significant volatility in recent days due to geopolitical developments in the region.

The Committee reviewed international market indicators, including benchmark crude movements and refined product price trends, and assessed possible scenarios for global energy markets. It was noted that the government is closely monitoring international price developments and undertaking continuous scenario planning to safeguard domestic energy security and economic stability.

The meeting further reviewed logistical and operational arrangements for crude imports, refinery operations, and maritime transportation, including coordination with international suppliers and shipping arrangements.

Relevant authorities briefed the committee on steps being taken to facilitate cargo movements and ensure the uninterrupted functioning of refineries and supply infrastructure.

The Committee emphasised the importance of maintaining optimal refinery throughput and seamless coordination among all stakeholders to sustain national fuel availability.

In addition to supply-side measures, the committee was also presented with a range of targeted energy conservation and demand management options aimed at reducing pressure on fuel imports during periods of global volatility.

Various measures relating to efficient fuel consumption, operational adjustments, and public sector conservation initiatives were reviewed. It was noted that responsible consumption and targeted conservation could generate meaningful savings in fuel imports while supporting national economic stability.

The Committee also reviewed coordination mechanisms with provincial governments to ensure effective monitoring of petroleum product availability and prevent any supply disruptions.

Provinces briefed the Committee on ongoing enforcement measures and inspections at petrol pumps, while federal authorities updated the participants on the development of an integrated monitoring dashboard to further enhance real-time visibility of stock levels and retail supply conditions across the country.

Finance Minister Muhammad Aurangzeb emphasised that the government’s foremost priority remains ensuring the uninterrupted availability of petroleum products across the country.

He noted that while global energy markets are currently experiencing heightened volatility, Pakistan’s supply position remains stable and well-managed due to proactive planning and close inter-ministerial coordination.

The Finance Minister further stated that the Committee will continue to closely monitor developments in international energy markets, domestic stock positions, and supply chain dynamics daily to ensure timely and coordinated policy responses.

He reiterated that the government remains fully committed to maintaining market stability, safeguarding national energy security, and ensuring that supply chains remain uninterrupted during this evolving global situation.