Air travel to become costlier

The airline has attributed the increase in surcharge to the continuing escalation of ATF prices. Fuel cost constitutes nearly 30-35 per cent of the an airline’s operating cost even as ATF prices have increased close to 12 per cent over the last two months.

Meanwhile, domestic carrier Indian is also contemplating increasing its surcharge by Rs 300. ‘‘Given the hike in ATF prices with effect from July 1st, GoAir is considering an option of hiking its current fuel surcharge of Rs 300. We are yet to conclude our evaluation and will take a decision shortly,’’ a GoAir official added.

Air Deccan will also increasing its fuel surcharge by Rs 200. However, no time frame for the levy has been announced.

Public sector oil companies, which revise ATF prices every month, have raised ATF prices by about Rs 900 per kilolitre in step with firming up of international prices. The hike in Mumbai was Rs 946.4 per kilolitre, to Rs 42,731. ATF prices in most of the states differ as airlines have to pay different local levies to the state governments.

Industry sources maintain that the high rate of sales tax on ATF was one of the primary reasons for domestic ATF prices being much higher than global prices. In order to offset these costs, airlines like Jet, Air Deccan and Kingfisher Airlines had decided to impose this surcharge of Rs 200-300 in May.

Even though fuel surcharge is levied by most global airlines, the charge is increasingly coming under regulatory scanner. The latest such case is that of British Airways which is being investigated by the UK and the US regulators for the price fixing of fuel surcharges on its flights to and from the UK.