ATF spike forces airlines to up fares afresh

In the event of the spiralling aviation turbine fuel (ATF) prices, domestic carriers are planning to impose additional fuel surcharges on tickets.

Jet fuel prices have hit an all-time high of Rs 43,600 per kilo litre in July up from Rs 43,000 per kilo litre a month back. Airlines had imposed a fuel surcharge in March, when ATF prices crossed Rs 42,000 for a kilo litre.

Jet Airways has announced that effective July 7, the airline will revise fuel surcharge applicable on all fares on all domestic routes in India.

The revised fuel surcharge of Rs 500 per ticket "" up from Rs 300 till now, will be applicable on all tickets purchased within and outside India, issued against both in rupee and dollar tariffs. State-run Indian is also exploring the options before it, including an increase in surcharge.

According to government sources, Indian has indicated to the government about the need to hike the fares as the jet fuel prices have been increasing.

Since January this yearATF price has gone by over 20 per cent to about Rs 38,000. According to analysts, when price of fuel, which is about 30 per cent of the cost of a carrier, goes up by 20 per cent, the overall cost of the airline increases by 6 per cent.

They also said that the carriers will be able to cover the increase in fuel cost with the increase in fares.

Carriers worldover are bleeding as a result of the spiralling price of fuel, which accounts for a large part of an airline's operational expense.

The government has initiated several moves, including allowing airlines to hedge on fuel prices in a bid to stem the rise in jet fuel prices.

The other steps that the government was likely to take were to allow private sector oil companies to sell ATF to Indian carriers and cut various duty components on fuel prices.