Aviation fuel costlier by Rs 1,600 a kilolitre. |
Domestic air fares are set to go up with state oil firms raising the jet fuel price by 5 per cent in line with the spike in international oil prices, which touched $71 a barrel yesterday. |
ATF (the fuel used by aeroplanes) would be costlier by about Rs 1,600 a kilolitre with effect from midnight tonight, said an official of the Indian Oil Corp, the country's largest oil firm. For international airlines, which do not pay local sales tax, the hike will be in the range of $35 to $40 per kilolitre. |
"We may consider an oil surcharge in the next few days. The fuel prices have gone through the roof," said GR Gopinath, managing director of low-cost carrier Air Deccan. This will be the first instance of Air Deccan imposing a fuel surcharge since its launch a year back. |
Other private carriers like Jet Airways and Air Sahara, too, are looking at similar options. "Oil prices have been increasing since March this year and the last fare increase was in April. We have been absorbing the impact since then. With the prices going up, we have to look at other options. We will take a decision in the next few days," said an executive with Jet Airways. |
"We have seen a severe impact on the cost as a result of the fuel price hike. Such a massive price hike cannot be absorbed. We may have to pass on a fraction of it to the customers," said an executive with another domestic private airline. |
The cost of ATF accounts for about 25 per cent of the operational costs of airlines. |
The average ATF price this year has been about Rs 30,000 per kilolitre -- much higher than the annual average of Rs 21,000 in 2003-04. |
State-run carriers are waiting for a directive from the government about the fare increase and are holding meetings with one another. |
Officials said the government was closely watching the situation. "We want to look at various options and see what can be done to minimise the impact," said one. Sources also said the government would take a final call on the issue only after consultations with allies, including the Left. |
The government is of the view that airlines are not in a position to absorb the impact of spiraling ATF prices. |
This hike will also affect Air-India and the international operations of Indian Airlines and the two private carriers, Jet Airways and Air Sahara, who are now flying abroad also. |
Most international airlines operating in the country have been charging fuel surcharge for the past few months. |
This will be the fourth hike in fares in less than 18 months. In July and October 2004, domestic airlines hiked fares by about 10 per cent on each occasion to account for the increase in the jet fuel price. In April this year, the fares were increased by 12 per cent due to the same reason. |