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Sharp rise in jet fuel prices forces Spicejet’s boss to think about increasing airfares by up to 15%

By wasmulhaq 
Updated Date

New Delhi: Flying is likely to be more expensive due to the sharp increase in jet fuel prices on Thursday by 16.3%, which would be an all-time high of Rs 1.41 lakh per kilo litre (kl, or 1,000 litres) in Delhi. The weakening of the rupee against the dollar and the effect of COVID-19 have already broken the backbone of airlines.

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SpiceJet has already rung the alarm bell to increase the cost of travel. SpiceJet CMD Ajay Singh, for instance, has termed these prices “not sustainable” and said a “minimum 10-15% increase in fares is required.” Comments from other airlines have not come yet.

“Aviation turbine fuel (ATF) prices have gone up by more than 120% since June 2021. He said the central and state governments should take action in a hurry to decrease taxes on ATF that are the highest in the entire world.

“SpiceJet has in the last few months tried its best to take as much of the burden as possible, which constitutes more than 50 per cent of our operational cost,” he added.

Airlines are not a cost-plus industry. We have hardly passed on half of the enhanced increase in operating costs to passengers. Due to the increased fares, the recovery in domestic traffic has taken a hit. “Until the six metros reduce ATF prices, not much will change for airlines in terms of survivability,” said an airline official.

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“The rupee weakening against the dollar by every Rs 1 means an enhanced expense of Rs 75-80 crore for a mid-size airline and Rs 150-200 crore for a large airline in India.” About 65-70% of our costs are dollar-denominated, like aircraft lease/maintenance, foreign stations, and GDS,” said another airline official.

 

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