'Jet fuel price not sustainable': SpiceJet urges Centre, states to reduce tax, hike fare by 10-15 per cent

NEW DELHI: Ajay Singh, chairman and managing director, SpiceJet, said on Thursday (June 16) that the massive increase in aviation turbine fuel (ATF), also known as jet fuel, is not sustainable and governments at the Centre and states, need to take urgent action to reduce taxes on ATF. 

“Aviation turbine fuel prices have increased by more than 120% since June 2021. This massive increase is not sustainable and governments, central and state, need to take urgent action to reduce taxes on ATF that are amongst the highest in the world," said Singh  Thursday.

The price of ATF  has been hiked by 16.3% to an all-time high of Rs 1.41 lakh per kilolitre in Delhi.  ATF price has nearly doubled in the calendar year 2022, up 91% in the last six months. Oil marketing companies revise ATF prices on the 1st and 16th of every month. 

Singh said that they have in the last few months tried to absorb as much of the burden of this fuel price rise, which constitutes more than 50% of their operational cost, as they could. 

"The weakening of the Indian rupee against the US dollar further significantly impacts airlines as our substantial cost is either dollar denominated or pegged to the dollar. The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares and we believe that a minimum 10-15% increase in fares is required to ensure that cost of operations are better sustained," he added. 

This is a big blow to passengers who are already finding it difficult to book tickets at current prices. According to travel agents, airfares have seen a minimum hike of 40-50% in this calendar year compared to pre-covid times. The fare hike is steeper in international routes. This has eventually impacted the tourism industry despite the strong 'revenge travel' trend as passengers are seen postponing their summer travel plans amidst high inflation.