Indigo Fare Hike: The effect of the increase in the prices of Aviation Turbine Fuel (ATF) in India in the last three months has now started becoming visible on the air fares. From today, Indigo has announced to impose a fuel charge of up to Rs 1,000 depending on the distance of the flight. The Indian aviation sector is at its peak travel season between October and December. According to experts, the increase in fuel charges in air fares is expected to have a huge impact on IndiGo passengers. ATF costs are the biggest expense for Indian carriers, consuming about 45 percent of their total revenue. Between June 1 and October 1, ATF prices in Delhi rose by 32.4 per cent to Rs 1.18 lakh per kiloliter (KL). Industry officials have indicated that some other domestic airlines may increase their fares like IndiGo by adding fuel charges to their airfares. However, a Vistara official said that the airline is not going to add any such extra charge in its airfares.
Fare increased by at least Rs 300
Indigo has imposed a fuel charge of Rs 300 for flights up to 500 kilometers (km) and Rs 400 for flights between 501 and 1,000 kilometres. Such a graded increase has been implemented across all flight categories, with those flying a distance of 3,501 km and above having to pay a fuel charge of Rs 1,000. An IndiGo official said that about 60 percent of the airline’s flights were in the 1,000 km range. This is not the first time that Indigo has imposed fuel charge. In May 2018, the airline had introduced a similar component to compensate for the substantial increase in ATF prices. Later, it was removed when ATP prices fell. Aviation analyst and founder of aviation blog Network Thoughts, Ameya Joshi, said in an interview to an English website that as a result of Thursday’s announcement, IndiGo’s airfares will increase by less than Rs 1,000 in most sectors. He said that this fuel surcharge will not take care of all the ATF price increase and hence, the airline may also increase the base airfare.
Flying will be expensive in peak season
Ameya Joshi said that other airlines can also follow Indigo. As a result, air travel can be expensive during peak travel season. Indigo said in a statement on Thursday evening that it is imposing fuel charges on domestic and international flights from Thursday midnight. This decision has been taken after the increase in ATF prices, which has increased with continuous price increases every month in the last three months. Under this pricing structure, passengers booking IndiGo flights will be charged fuel charges per sector, depending on the sector. Rajiv Mehra, honorary secretary of the Federation of Associations of Indian Tourism and Hospitality, told Business Standard that any increase in airfares was detrimental to the interests of travelers and was a double whammy ahead of the festive season.
Airlines will suffer losses
Aviation analyst and founder of aviation blog Network Thoughts, Ameya Joshi, said air fares are already high and any further increase during the festive season will hurt the sector. However, airlines also need to protect their income as ATF prices have increased significantly. We sincerely hope that this is a one-time measure and this surcharge will be withdrawn when ATF prices come down. State-owned Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited revise ATF prices on the first day of every month based on the average international price of the previous month.