Aviation turbine fuel price hiked by 18.5%

With state-run oil firms today deciding to hike aviation turbine fuel prices by 18.5 per cent...

With state-run oil firms today deciding to hike aviation turbine fuel (ATF) prices by 18.5 per cent, air travellers will now have to pay dearly to take to the skies. State-owned National Aviation Company of India Ltd (NACIL), which runs Air India-Indian said it would hike fuel surcharges on short haul routes (below 750 km) by Rs 300 per ticket, while long-haul flights (above 750 km) will cost Rs 550 extra per passenger. Other airlines, including budget carriers SpiceJet and IndiGo, are expected to follow suit.

With this hike in jet fuel prices, the fourth straight one since February last year, the fuel surcharge for short-haul flights will go up from roughly Rs 1,950 a ticket currently to Rs 2,250. For long-haul routes, the fuel surcharge will go up to Rs 2,900 from Rs 2,350 per ticket at present. In May last year, the fuel surcharge stood at just Rs 900. For an air passenger, the increase in surcharge will mean a direct 15-20 per cent increase in the ticket price. For instance, a low-cost carrier’s Mumbai-Delhi flight, which currently costs Rs 3,800-3,900, is now expected to cost around Rs 4,400. In May last year, the average ticket price on the same route stood at just Rs 2,900.

“Fuel constitutes 40 per cent of an airline’s operating costs and with the huge jump in ATF prices announced today, we have no option but to hike the fuel surcharge. Short haul flights will now cost Rs 300 more and the surcharge on long haul flights will be raised by Rs 550 a ticket,” NACIL executive director (corporate communication) Jitender Bhargava told The Indian Express today. The hike will come into effect from June 3.

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While other airlines have not yet decided the quantum of increase in prices, a hike in the fuel surcharge is considered to be “inevitable” by most operators. “There is no option but to increase the fuel surcharge. We can’t afford not to,” a senior SpiceJet official had said earlier. Market leader Jet Airways’ chief executive officer (CEO) Wolfgang Prock-Schauer refused to comment when contacted, but it is expected that this airline too will shortly announce a hike. Jet was the first airline to increase the fuel surcharge after ATF prices were hiked by 10 per cent last month.

With the hike in ATF costs, the jet fuel price charged from airplanes has been raised to Rs 69,227 per kilolitre (kl) in Delhi, up from Rs 58,387 per kl currently. In Mumbai, which has the country’s busiest airport, prices have gone up to Rs 76,625 per kl from Rs 64,824 per kl. The increase in fuel surcharge planned by Air India today is double the hike that was announced last month. After the 10 per cent hike in ATF announced last month, airlines had collectively raised their fuel surcharges by around Rs 150 a ticket on short haul routes and Rs 300 a ticket on long-haul routes.

But airlines say the hike in fuel surcharge will offset only a part of the additional cost liability that increased fuel prices have imposed on Indian carriers. “The increase will offset only about 30-35 per cent of our total increase in operating costs as a result of rising jet fuel prices,” Bhargava said. Global crude prices have been hovering at over $ 135 a barrel, leading to a severe crisis for airlines worldwide, for whom fuel constitutes 40-50 per cent of overall operating costs.