ReutersAirfares are expected to rise even more in the days ahead, as the state-backed oil marketing companies (OMCs) notified a hike in the aviation turbine fuel (ATF) prices today on June 16.
Private airline said on Thursday it was raising fares as much as 15% to counter high fuel costs and a weak rupee, which it says are making the cost of operations unsustainable.
ATF prices are now at a record high across the country. ATF costs stand at Rs 1,41,232.87 per kl in Delhi, Rs 1,46,322.23 per kl in Kolkata, Rs 1,40,092.74 per kl in Mumbai and Rs 1,46,215.85 per kl in Chennai for domestic airlines.
Jet fuel prices for domestic airlines on international run cost $1,372.71 per kl in Delhi, $1,412 per kl in Kolkata, $1,369.12 per kl in Mumbai, and $1,367.56 per kl in Chennai.
Since ATF accounts for 30-40% of an airline's operating costs in India, an increase in its price will eat into the profit margins.
As ATF costs are linked to global crude oil prices, they have risen steadily as a result of the Russia-Ukraine conflict, which has removed Russian oil from the market. Airline companies have been under pressure since the onset of the Covid-19 pandemic which saw many parts of the world being shut down.
Domestic prices have risen 50-75% on popular routes in this year’s May compared to the same month last year.
Earlier on Thursday, Ajay Singh, Chairman and Managing Director, SpiceJet, revealed that since June 2021, the price of ATF has risen by more than 120%. “Such a giant increase is unsustainable, mandating both the federal and state governments to quickly cut the ATF taxes, which are amongst the highest in the world,” he said. Singh further said a minimum 10-15% increase in air fares is required to ensure that operating costs are better sustained.
“The sharp increase in aviation turbine fuel (ATF) prices and the depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares,” said Singh to the news agency PTI.
Private airline said on Thursday it was raising fares as much as 15% to counter high fuel costs and a weak rupee, which it says are making the cost of operations unsustainable.
ATF prices are now at a record high across the country. ATF costs stand at Rs 1,41,232.87 per kl in Delhi, Rs 1,46,322.23 per kl in Kolkata, Rs 1,40,092.74 per kl in Mumbai and Rs 1,46,215.85 per kl in Chennai for domestic airlines.
Jet fuel prices for domestic airlines on international run cost $1,372.71 per kl in Delhi, $1,412 per kl in Kolkata, $1,369.12 per kl in Mumbai, and $1,367.56 per kl in Chennai.
Since ATF accounts for 30-40% of an airline's operating costs in India, an increase in its price will eat into the profit margins.
As ATF costs are linked to global crude oil prices, they have risen steadily as a result of the Russia-Ukraine conflict, which has removed Russian oil from the market. Airline companies have been under pressure since the onset of the Covid-19 pandemic which saw many parts of the world being shut down.
Domestic prices have risen 50-75% on popular routes in this year’s May compared to the same month last year.
Earlier on Thursday, Ajay Singh, Chairman and Managing Director, SpiceJet, revealed that since June 2021, the price of ATF has risen by more than 120%. “Such a giant increase is unsustainable, mandating both the federal and state governments to quickly cut the ATF taxes, which are amongst the highest in the world,” he said. Singh further said a minimum 10-15% increase in air fares is required to ensure that operating costs are better sustained.
“The sharp increase in aviation turbine fuel (ATF) prices and the depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares,” said Singh to the news agency PTI.
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