Airlines in India to hike fuel surcharges

An increase in aviation turbine fuel (ATF) prices has forced all the major airlines in India to hike the fuel surcharge by Rs. 100, raising the total surcharge to Rs. 750 a ticket with effect from September 5.

Country’s leading airline, Jet Airways, serving domestic and international routes, today announced that the airline will revise the fuel surcharge by Rs. 100 per ticket, which would be applicable on all classes of fares, including the Club Premiere and Economy Class tickets on all domestic flights in India.

The hike in the surcharge followed a continuous escalation in aviation turbine fuel costs, recently increased by 4% by PSU oil companies on Thursday (September 1).

However, the company release clearly stated that “The revised fuel surcharge, which has been increased from Rs. 650 to Rs. 750, will be applicable on all tickets purchased within and outside India, issued against Indian rupee tariffs. This surcharge of Rs. 750 will be collected per flight coupon on all domestic routes within India. For tickets issued outside India, a surcharge of $ 16 (Rs. 744) per sector will be applicable on domestic travel within India.”

The announcement created a weird situation in certain sectors where the fuel surcharge will be equivalent to or higher than the ticket cost, specifically in short-distance flight sectors.

For instance, a Mumbai-Goa one-way fare of a low-cost carrier, which is Rs. 750 until now, will cost Rs. 1,500 (Rs. 750 for the ticket and Rs. 750 for the surcharge), just double, after the price hike. Furthermore, passengers who book tickets three months in advance on low-cost carriers will now pay more for the fuel surcharge and less for tickets. Early bookings with low-cost airlines for regular routes cost as low as Rs. 499 per flight.

Not only the Jet Airways is going to increase the fuel surcharge, but other airlines too have similar plans. State owned primarily domestic airline, Indian Airlines spokesperson said, “We are considering increasing the fuel surcharge.”

Another Bangalore based Air Deccan’s managing director GR Gopinath said, “We are going to increase the fuel surcharge by another Rs 100.” Other low-cost carriers, too, are doing the same.

New Delhi based SpiceJet Chairman Siddhanta Sharma said, “We will soon increase the fuel surcharge.” Go Air, a domestic budget airline based in Mumbai, is also considering a similar suit. “Yes we are discussing increasing the surcharge which could be between Rs 50-100. We are likely to finalise the hike by Monday,” Go Air managing director Jeh Wadia in his response to a price hike said.

The hike in surcharges by the airlines will be the third in three months and fourth this year. The surcharge has hiked from Rs. 300 in the past three months to Rs. 650 till now which is again being hiked to Rs. 750.

The airlines have a sound reason behind their move and that is continuous rise in ATF. Aviation turbine fuel is quoting at an all-time high of Rs. 49,609.80 a kilolitre. In the last one year, ATF prices have increased by 27%.

ATF is the determined factor for 35% of the operating cost of full-service carriers and 45% for the low-cost ones.