You must have heard the term Aviation Turbine Fuel (ATF) which is actually a special grade of petroleum spirit which propels the jets and make it possible for civil aviation to fly passengers from one destination to another using the aerial route. It is precisely this jet fuel whose prices constitute the biggest component of operational costs of the flights. By varying estimates the price of this fuel makes for about 30 to 45 percent of operating costs of the flights from one country to another. The prices of the fuel in the international markets are determined by forces of demand and supply and are based on the movement of the indices for the same. It is the organization called Platts whose proprietary methodology for calculating the price determined the prices of fuel in the international markets. So, it is the Platts Jet Fuel Price Index whose movement will determine whether you will get the cheap air tickets for your domestic or international flights or not.
So, how is the price calculated by this index? The methodology involves making daily assessments for the prices in the spot market in the various regional centers. Different regions are given different weight which is dependent on the volume of off-take and trading in the fuel in that region. In this way, at first, the regional indices are calculated. Thereafter, these regional indices are further given weight for calculating the Global Composite Index.
The base year for making the comparison of these indices is taken as the year 2000. The average spot prices of the fuel during that year are compared with the current ones in order to determine the percentage increase in the prices. Platts Index is taken as a global benchmark for monitoring the movement of prices of jet fuel. World aviation bodies such as IATA also use this index in their fuel price related data.