ATF price up 25% after flip-flops; domestic flyers spared steep rise in fares for now

NEW DELHI: Domestic air travellers may have been spared steep airfare hikes for now as oil companies didn’t fully pass on the impact of higher crude prices, but international tickets for western destinations are likely to go up further after doubling since the start of the Iran war as airlines take longer routes.

After a series of flip-flops through Wednesday, govt limited the hike in aviation turbine fuel (ATF) base price for domestic flights to 25%, while warning of “interventions” if fares rise unreasonably. Jet fuel base price for international sectors has more than doubled over the last month.

The day had started with domestic and international ATF getting dearer by 115% and 107%, respectively. Within hours oil companies clarified that the hike for scheduled airlines was lower. By late afternoon, govt pegged the increase in base price at 25%.
By evening, IndiGo had revised the fuel surcharge it had introduced on March 13.

For international ops, ATF prices have more than doubled in last month: IndiGo

Effective from today (April 2), only short domestic flights covering distances up to 1,000 km will see a cut from the earlier Rs 425. All other flights, from longer domestic ones to those going to the UK and EU, saw a rise of up to Rs 7,700. Earlier, domestic flights faced a flat surcharge of Rs 425, irrespective of distance flown. Other airlines like Air India Group and Akasa could follow suit.
To avoid charges of collusion, Indian carriers always stagger levy of and/or hike in fuel surcharge, which made a comeback last month.

“IATA’s Jet Fuel Monitor indicates over 130% increase in fuel prices for the region on a month-on-month comparison…. re-calibrated domestic fuel charge to vary by different travel distances…. without (govt limiting domestic ATF hike) increases would have severely impacted affordability of domestic air travel. For international operations, ATF prices have more than doubled in the last month, impacting the airline’s operating costs on these routes,” IndiGo said.

With several key elections round the corner, govt is closely watching domestic airfares. Joint secretary in aviation ministry Asangba Chuba Ao said: “(Limiting domestic ATF hike to 25%) will ensure domestic operational costs of Indian carriers remain manageable…. prevents a potential industrywide crisis…. allows airlines to maintain competitive pricing for domestic travellers, avoiding additional fuel surcharges that would have been necessary under a marketlinked pricing mechanism. If there are any abnormal fare surges, we will intervene.”

Oil companies are yet to get clarity on the impact that the “staggered increase” will have on their finances.

Sujata Sharma, joint secretary in the oil ministry, said that the staggered increase in prices and the timeline for the next revision were policy matters, and govt would decide at an appropriate time.

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