New Delhi, Dec 1 (IANS): India's largest fuel retailer Indian Oil announced a 0.81 percent increase in the price of jet fuel in New Delhi region, effective from midnight Saturady.

According to IOC, the aviation turbine fuel (ATF) will cost airlines 0.81 percent more at New Delhi - Rs.74,204.74 per kilolitre from Rs.73,607.26 per kilolitre.

The fuel price difference in other major cites will be decided by factoring in the state tax regimes applicable.

The three state-owned oil marketing companies (OMCs), which revise jet fuel prices on the first day of every month, had reduced ATF price by 4.51 percent on Oct 31, 2013, a month after hiking prices by a massive 6.9 percent for purchases from Sep 1.

Fuel prices are a determining factor in the tough Indian aviation sector as the cost comprises about 50 percent of the total operating costs of an airline.

High prices have dented the sector as major airlines bleed under the high state sales tax regime which ranges from 4-34 percent.

Currently, ATF sold in the country is nearly 50-60 percent costlier than in overseas markets like Bangkok, Singapore or Dubai.

There has been a longstanding perception that ATF, which is a super-refined form of kerosene, should not be subsidised for air travel.

The government currently subsidises sensitive products like diesel, LPG (liquefied petroleum gas) cylinders and kerosene.

Currently, the central government is trying to get the fuel as a notified category item. Once listed as a notified product or a declared good under the Central Sales Tax (CST) Act, airlines will only have to pay a uniform sales tax of four percent.