Airfares Likely to Rise with Steep Jump In Jet Fuel Price

Airfares are expected to rise with the steep increase in jet fuel prices amid the ongoing West Asia conflict.

The price of Aviation Turbine Fuel (ATF) has more than doubled to a record ₹2.07 lakh per kilolitre on Wednesday, and this is the first time that the jet fuel price has crossed the ₹2 lakh per kilolitre mark.

In Delhi, ATF price has been hiked by ₹1,10,703.08 per kilolitre, or 114.5%, to ₹2,07,341.22 per kl, according to state-owned fuel retailers.

Officials said airfares are expected to rise as airlines would have to increase fares to cover the higher operational costs.

There were no immediate comments from airlines on the impact of the ATF price hike on the airfares.

The steep price hike would add to the spiralling operational costs of airlines, which are already facing headwinds due to the West Asia conflict that started on February 28.

ATF accounts for around 40% of an airline's operational costs.

State-owned Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum revise ATF and LPG prices on the first day of every month based on international benchmarks and the exchange rate.

Indian carriers are already burning more fuel for operating many international flights as they are forced to take longer routes due to airspace curbs in the West Asia region.

With increasing fuel prices, last month, Indian carriers imposed fuel surcharges on tickets.

On Tuesday, the International Air Transport Association (IATA) said that airfares are already rising in the wake of the West Asia turmoil.

"... without knowing the length and intensity of the war in the Middle East, it is impossible to quantify the full impact that it will have on airline prospects. But some things are already clear. Fuel costs have risen sharply. With tight capacity and thin margins, airfares are already rising," IATA Director General Willie Walsh said on Tuesday.

IATA is a global grouping of around 350 airlines, including Air India, IndiGo, Air India Express and SpiceJet.