The Indian airline industry is staring at a 10–15 percent fare hike due to the US-Israel-Iran war-induced increase in fuel prices.
Indian airlines, operating on wafer-thin margins, may resort to ticket price hikes if the geopolitical situation worsens, according to a report by Moneycontrol.
Rising crude oil prices may push up the cost of aviation turbine fuel (ATF), compelling airlines to pass on part of the cost burden to customers.
ATF accounts for 30–40 percent of operating costs for airlines and contributes up to 45 percent of the airfare structure, according to the report.
Current ATF prices in India are just a whisker away from the Rs 1 lakh per kilolitre mark.
“The major increases are currently being witnessed on international routes due to airspace closures and cancellations. However, there are early indications of rising airfares on domestic routes too, particularly on high-demand sectors such as Delhi–Mumbai, Bengaluru–Delhi and Mumbai–Hyderabad,” CEO of travel platform WanderOn, Govind Gaur, was quoted as saying.
The upcoming travel season due to school holidays is expected to increase air travel on the above-mentioned domestic routes.
Since February 28, when the US and Israel launched strikes on Iran, benchmark Brent crude prices have climbed from around $72.48 a barrel to nearly $80.
While US President Donald Trump has said the war may extend to three to four weeks, Iran has warned that any energy shipment passing through the crucial Strait of Hormuz will be attacked.
Iran has already attacked Qatar’s key natural gas facilities, leading to their shutdown.
Brent crude rose 2.61 percent as of noon IST, with the April contract trading close to $80 per barrel. WTI crude was up 2.26 percent at $72.84 per barrel.
The increase was modest compared to the nearly 10 percent jump during Monday’s trade.
Natural gas prices also climbed 2.47 percent on Tuesday, building on a 3.5 percent rise in the previous session. Prices have increased more than 7 percent over the past five days, crossing $3 per MMBtu.
