Air India rejigs fuel surcharge matrix

For domestic travel, Air India will shift from a flat surcharge to a distance-based grid effective April 8. Charges will range from Rs 299 for sectors up to 500 km to Rs 899 for flights beyond 2,000 km. Comparable surcharges at IndiGo range from Rs 275 to Rs 950 across similar distance slabs though Air India is marginally higher on shorter routes and slightly lower on longer-haul domestic sectors.

The revision follows the government’s decision to cap domestic aviation turbine fuel (ATF) price hikes at 25%, forcing airlines to adopt a calibrated pass-through. Both carriers have mirrored this approach and have signaled limited room to fully offset cost pressures in the domestic market.

Sharper divergence on international routes

The divergence is sharper on international routes, where no such cap exists. Air India has introduced region-based surcharges ranging from USD 24 (around Rs 2,300) for SAARC routes to USD 280 (around Rs 26,000) for North America and Australia. In comparison, IndiGo’s international surcharge ranges from Rs 900 for short-haul routes to as high as Rs 10,000 for long-haul destinations such as Europe.

This comparison suggests Air India’s surcharges on long-haul international routes are significantly higher in absolute terms, reflecting its wider network exposure to fuel-intensive operations such as flights to North America among long haul routes. IndiGo, with a predominantly short- to medium-haul international network, has capped its surcharge at lower levels.

What does IATA data suggest?

According to the International Air Transport Association (IATA), global jet fuel prices nearly doubled to USD 195.19 per barrel in late March, while refining margins tripled, intensifying cost pressures. The changes in fuel surcharge matrix for both airlines underscore mounting pressure on carriers, where fuel accounts for nearly 40% of operating costs, necessitating careful fare calibration to protect margins without hurting demand.