Low-cost travel in the country is slowly running the risk of not being low cost anymore, with the aviation turbine fuel (ATF) prices jumping to an all-time high. Low-cost airlines such as SpiceJet have already announced hikes in their fares.
ATF prices, which have been rising since since the beginning of the calendar year, was once again raised on November 1. With the latest round of hike, ATF prices in Mumbai stands at Rs 42,796.74 per kilolitre from Rs 41,105.49 per Kl a month ago. ATF prices in January stood at Rs 39,013 per KL and then fell to Rs 35,078.99 per Kl in February.
Similarly in Delhi, ATF price stands at Rs 42,796.74 per kilolitre from Rs 41,105.49 per Kl a month ago. ATF prices in January stood at Rs 37,746.92 per KL and then fell to Rs 33,982.95 in February.
In India, ATF accounts for around 40% of the operating cost of most major airlines, which is among the highest share in the world.
Aviation experts pointed out that with the global prices of crude scaling new peaks over the past few months and inching towards the $100-mark, the rise in ATF prices was only natural. And due to the ATF prices being on the rise continuously for the past several months, airlines have little choice but to pass on the increase to passengers.
Because of the high levies imposed by the state governments, ranging from 4-32% on ATF, the operating cost structure of India?s domestic carriers is vastly different from other countries. The Indian ATF prices are around 75% higher than the international prices while domestic aircraft operators pay over eight times higher taxes on ATF as these are charged with various tax levies, totaling 66% against 8% on international airlines.
Many domestic airlines have also decided to raise fuel surcharge – that was hiked by Rs 100 to touch the Rs 1,200 mark on October 1 – as the international price of crude has touched an all-time high of $ 96 on Thursday, industry sources said.
In September 2006 the surcharge increased to Rs 750 before jumping to Rs 900 in May this year. In July, airlines raised the surcharge to Rs 950 before raising it again to Rs 1,100 in August.
?If ATF prices continue to spiral, we may have to hike fuel surcharge. No one can run a business on loss,? Naresh Goyal, Jet Airways chairman said at a press conference announcing their daily flights to New York recently.
Spice Jet will raise prices by around 4% or between Rs 125 to Rs 200, Samyukth Sridharan, chief commercial officer for Spicejet said.
The ministry of civil aviation and the domestic air carriers have been fighting a losing battle to keep ATF prices in control because raising petrol, diesel, LPG and kerosene prices is a political minefield.
