Saturday, September 01, 2012

New Delhi, India: Aviation Turbine Fuel price hike effect: Airfares likely to increase soon

NEW DELHI: Airfares are likely to rise soon with Indian carriers mulling hiking fuel surcharge on tickets following a steep increase in jet fuel prices. 

"We are studying the impact of a steep hike of aviation turbine fuel prices on our operational costs which are high in any case. We are studying the situation and may take a decision soon," an airline official said, requesting anonymity.

Oil marketing companies had yesterday hiked the aviation turbine fuel (ATF) price by a steep 7.6 percent, sending ATF price to an all-time high of Rs 72,282 per kilolitre.

It is the fourth straight increase in rates since July. Jet fuel constitutes almost half of an airline's operating costs, compared to 20-25 percent globally, due to high taxes on ATF by the state -- ranging from four percent to 30 percent.

Though international airlines operating to India are exempted from state-level taxes they also pay nearly 16 percent more than the global average.

Airline companies have been demanding reduction in taxes and also sought permission from the government to import ATF directly.

Government has given permission to five domestic airlines to import ATF.

Those given permission to import ATF include Kingfisher Airlines, SpiceJet, IndiGo, Go Airlines and Air India.

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