Airfares are set to shoot up as one of India's largest airlines IndiGo has introduced a distance-based "fuel charge" on domestic and international routes. According to the company, the fuel tax will vary between Rs 300 and Rs 1,000 per sector. This decision was made in response to the recent sharp increase in the price of jet fuel. ATF (aviation turbine fuel) accounts for a substantial portion of an airline's operating expenses, necessitating fare adjustment to address such cost surge, IndiGo said.
"IndiGo, India's leading airline, is introducing a fuel charge on domestic and international routes, effective 00:01hrs October 06, 2023. The decision follows the significant increase in Aviation Turbine Fuel (ATF) prices, which have surged in the last three months with consecutive price hikes every month," the airline said in a press note.
What is IndiGo's fuel surcharge?
Issuing a statement, IndiGo said, "Under this pricing structure, passengers booking IndiGo flights will incur a fuel charge, per sector, based on the sector distance".
According to the press note, the airline will now charge Rs 300 for trips under 500 km, Rs 400 for distances between 510 and 1,000km, Rs 550 for trips between 1,001 and 1,500 km, Rs 650 for trips between 1,501 and 2,500 km, Rs 800 for trips between 2,501 and 3,500 km, and Rs 1,000 for trips more than 3,501 km.
"IndiGo remains committed to offering affordable fares to its valued customers. IndiGo will also publish the tariff sheet subsequently, with the sector-wise charge that can be viewed on http://www.goindigo.in," the airline said.
ATF price hike
On October 1, the cost of aviation turbine fuel, or jet fuel, increased by 5 per cent - the fourth straight monthly increase since July. According to price notification of state-owned fuel retailers, jet fuel has been increased by Rs 5,779.84 per kilolitre, or 5.1 per cent, in the national capital to Rs 118,199.17 per kl from Rs 112,419.33.
This fourth straight increase in prices of jet fuel, which makes up for 40 per cent of an airline's operating cost, has increased the burden on already financially strained airlines. The increase comes on back of the steepest-ever 14.1 per cent increase (Rs 13,911.07 per kl) effected on September 1, and a 8.5 per cent or Rs 7,728.38 per kl increase on August 1.
Notably, in July, ATF price had gone up by 1.65 per cent or Rs 1,476.79 per kl. In four increases, ATF prices have gone up by a record Rs 29,391.08 per kl.
