Air travel to get costlier as jet fuel rates rise

Air travel is set to be costlier as there has been an increase of 7 per cent in jet fuel's price. According to an airline official, jet fuel prices in India are 45-50 % higher as compared to the international market.

New Delhi:Air travel can get more expensive in the coming days as the price of Aviation Turbine Fuel (ATF) or jet fuel was increased by about 7% on Monday.

According to the price notification of the public sector petroleum companies, the price of aviation turbine fuel in the national capital has increased by Rs 3,663 to Rs 59,400.91 per Kilolitre (kl). Earlier on February 16, ATF prices in New Delhi was Rs 55,737.91 per (kl).

As on March 1, the rates revised by state-run oil marketing companies for ATF stood at Rs 57,519.65 per kl in Mumbai, in Chennai, the rate was Rs 60,758.61 per kl and in Kolkata, the rate for per Kilolitre ATF was at Rs 63,828.81.

Speaking to ETV Bharat, an airline executive said, "Fuel should be brought under the ambit of GST. This has been our long-pending demand. The ATF takes more than 30 % of the total cost of an airline."

According to an airline official, ATF prices in India are 45-50 % higher as compared to the international market.

Notably, No-frills carrier SpiceJet in February reported a consolidated loss of Rs 66.78 crore for the December quarter of FY21 while India's largest airline IndiGo reported a consolidated loss of Rs 620.1 crore for the same quarter.

Last week, in a webinar by aviation consultancy firm Centre for Asia Pacific Aviation (CAPA) India, Kamal Hingorani, chief customer service officer at SpiceJet had said that his airline will increase services to states that reduce sales tax on ATF, and has done so in the case of ten airports across six states.

It is worth mentioning here that fuel expense, of which a big chunk includes state tax, is a major cost factor for airlines.

Civil Aviation Minister Hardeep Singh Puri had on February 14 informed the Parliament that the aviation turbine fuel price has risen by three times since the resumption of scheduled domestic flights on May 25.

Kinjal Shah, vice president, ICRA had in a February 8 report stated, " The ATF prices increased sequentially by 24.1% in July 2020 and by 4.2 % in August 2020. However, IT declined sequentially by 3.4 % in September 2020 and by 5.6% in October 2020, before increasing 4.6% in November 2020, 9.1% in December 2020, 10.2% in January 2021, and 5.4% in February 2021 (as on 1 February 2021)."

The civil aviation sector was completely closed down on March 23 due to the nationwide lockdown to check the spread of COVID-19, and domestic flights were reopened on May 25 in a slow and calibrated manner.

Meanwhile, Hardeep Singh Puri on Monday said that number of domestic passengers on February 28, 2021, rose to 3,13,668 on 2,353 flights, the highest since the resumption of domestic flights on May 25, 2020.

On Friday, the Civil Aviation Minister had said that the domestic air traffic is expected to be back to the full pre-COVID level by the summer schedule with the traffic seeing a sharp recovery from the July quarter onwards after the resumption of the services post lockdown.