Journalism of Courage
In the seventh consecutive hike, state-owned oil retailers Friday revised the prices of Aviation Turbine Fuel (ATF) by 2 per cent. The jet fuel will now cost Rs 1,12,924.83 per kilolitre in Delhi — an all-time high. On account of costlier fuel, airfares have already doubled in the past few weeks on some of the popular routes. Going ahead, travel industry professionals said,
fares for late April and the entire month of May are likely to be priced up to 15% higher than current levels.
Jet fuel prices are revised on the 1st and 16th of every month, based on the average international price of benchmark fuel in the preceding fortnight. Last month, international crude oil prices had climbed to a 14-year high of $140 a barrel and have since cooled off but stay elevated above $100 a barrel.
Sector experts said that the increase in ATF prices could translate into higher airfares ahead of the summer vacation season, which is the peak travel period during a year. Notably, domestic airfares are still governed by government-mandated price ceilings and floors.
“With ATF becoming costlier, flight prices have doubled across some popular routes in the past few weeks. Travellers will need to book in advance for their upcoming trips if they want to get the best possible prices. Hopefully, the high demand for summer travel that the industry is witnessing will help offset fuel costs,” Aloke Bajpai, group CEO & co-founder of online travel portal ixigo said.
Aviation turbine fuel makes up for almost half of the cost for airlines, the increase in its prices is expected to be passed on to the consumers given the precarious financial condition of Indian carriers. The heightened demand during the summer travel season means that airlines would not shy away from raising airfares.
“With the upcoming peak summer travel season, fares are expected to increase. Our expectation is that departures for late April and the entire month of May are likely to be priced up to 15% higher than current levels,” said Indiver Rastogi, president & group head–Global Business Travel, Thomas Cook & SOTC.
The ability to pass on the increase in fuel costs to consumers is expected to benefit the airlines. Jet fuel prices have been increased by state-owned oil marketing companies every fortnight since the the beginning of 2022, and in seven hikes starting January 1, ATF prices have been increased by Rs 38,902.42 per kilolitre.
“The high price environment continues with oil now priced higher than what it was 15 days ago. But a strong travel season and removal of all restrictions are good news for the industry. The higher fares may be a deterrent for some but largely revenge tourism is driving travel,” Ameya Joshi of aviation analysis portal NetworkThoughts said.
