IndiGo announced the introduction of fuel surcharge on domestic and international routes from March 14, following the Air India Group which announced the expansion of fuel surcharge on March 10. Several major Indian and international airlines are set to implement or increase fuel surcharges in the upcoming weeks, signaling a sharp rise in airfares for the spring and summer travel seasons.
ATF Prices Surge
The move comes as the aviation industry grapples with a sudden spike in Aviation Turbine Fuel (ATF) prices, driven by escalating geopolitical tensions in the Gulf region. The International Air Transport Association’s Jet Fuel Price Monitor indicates that fuel prices in Asia have increased by 84.8% compared to the prior month and 89.9% from the past year’s average.
IndiGo Surcharge Slabs
From Saturday, IndiGo will charge an additional Rs425 for the domestic routes and the Indian subcontinent. The surcharge for Middle East routes will be hiked by Rs900 while South East Asia, China, Africa and West Asia will see a surcharge of Rs1,800. Moreover, flights to Europe will get costlier by Rs2,300.
Airline Cost Pressure
“ATF represents a significant share of airlines’ operating cost. This sudden and steep increase will have a material impact on all airlines’ costs and network. While offsetting the entire impact of this fuel price surge requires a very substantial adjustment to fares, IndiGo has introduced a relatively smaller amount as a fuel charge keeping in mind the consequential burden on customers,” the airline stated.
Air India Rollout Plan
The Air India Group initiated a three-phase rollout of fuel surcharges. In the first phase, domestic and SAARC nations bookings now attract a surcharge of Rs399, while international routes are seeing increases ranging from $10 for West Asia, $60 for South East Asia and $90 for Africa. In the second phase for all bookings made from March 18, long-haul surcharges for Europe, North America, and Australia are expected to reach up to $200 per ticket. The third phase will see surcharges being applied for Far East destinations.
Foreign Airlines Follow
Apart from the two major Indian carriers, foreign airlines, including AirAsia, Air New Zealand, Cathay Pacific, Finnair, Hong Kong Airlines, Qantas, Thai Airways and Norse Atlantic Airways, have either introduced fuel surcharges or have announced to introduce it in the upcoming week. Some of these carriers have also adjusted their fares to incorporate rising operational costs due to a hike in ATF prices.
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More Surcharges Likely
According to sources many major Indian and foreign airlines will be announcing fuel surcharges in the upcoming week to protect their margins. Airlines cited that fuel accounts for nearly 40% of its operating costs, making the current price escalation unsustainable without passing costs to consumers.
Industry Voices Concern
Ajay Singh, chairman of SpiceJet, in a media interview, had said that oil prices at $90 per barrel is also unsustainable. An official from one of the Indian airlines, told the Free Press Journal, that introducing fuel surcharge is “inevitable.”
No Fuel Shortage
While the price of jet fuel is soaring, industry officials said that there is no imminent shortage of ATF. The reassurance portrays that the issue pertains to cost and not availability.
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