INDIAN airfares shot up today, as a steep hike in aviation fuel prices last week caused fuel surcharges to soar, affecting Air India, Jet Airways and JetKonnect.
The surcharge for distances flown up to 1,000km is now Rs1,750 (US$31.30) after an increase of Rs150, while the surcharge for distances above 1,000km has risen to Rs3,500 with a Rs250 adjustment. One-way international tickets have experienced a US$15 increase in surcharge.
This is the fourth time since July that oil companies in India have raised prices.
Aviation turbine fuel price rose by 7.6 per cent to an unprecedented high of Rs72,282 per kilolitre, which means fuel cost now accounts for about 50 per cent of an Indian carrier’s operating costs, compared to a much lower 25 per cent for most international airlines.
State taxes on aviation turbine fuel in India range from as high as 30 per cent to a more reasonable four per cent. International airlines buying fuel in India are not required to pay state taxes but still fork out about 16 per cent above average international prices.
Officials of LCCs like IndiGo and SpiceJet declined to comment if they would raise airfares too but stated that they were waiting to see the impact on their operating expenses.
Reduction in the number of Kingfisher flights has helped full-service carriers and LCCs come closer to breakeven point per ticket sold. As compared to a previous Rs1,000 shortfall, the gap is only Rs250 now, with the LCCs commanding 70 per cent market share in Indian skies.
