–
NEW DELHI: Air travellers should get ready for a major hike in airfares. Jet fuel prices have been more than doubled for April following the Iran war, dealing a deadly blow to Indian carriers. Oil PSUs early on Wednesday morning announced aviation turbine fuel (ATF) pricing for April, with the same for domestic flights increasing by about 115% and that for international flights by about 107%. The rupee touching new life lows on a daily basis adds to airlines’ burden as most of there costs are dollar-denominated.Domestic ATF pricing: A kilo litre (KL or 1,000 litres) of ATF in India’s busiest aviation hub Delhi’s IGIA will now cost Rs 2,07,341.22 — up 114.5% from Rs 96,638.14 last month — for domestic flights. This is the first time the price of this refined kerosene meant to ensure aircraft defy gravity has defied gravity by crossing the Rs 2-lakh mark in Delhi, Kolkata, and Chennai. India’s second busiest hub, Mumbai’s CSMIA, will see the price hiking 115% from Rs 90,451.87 last month to Rs 194,968.67 in April.ATF pricing for international flights: ATF pricing has crossed the $1,000-mark for the first time in India for these flights by Indian carriers. A kilo litre of ATF for international flights will now cost $1,690.81 in Delhi — up 107% from $816.91 last month. Mumbai pricing and hike is almost the same. At $1,727.3, Kolkata will see the highest price — up 102% from last month’s $855.25. With the rupee at record low, the pricing will pinch even more.In April and May 2024, ATF price for international flights was over $900. But at that time, the dollar-rupee exchange rate was at 83-84 levels. Now it is at a record low of over 95.What it means for airlines’ cost structure: Even before the anticipated hike in India which is a fallout of the Iran war and on similar lines with what has happened in most other countries, ATF for domestic flights was one of the most expensive globally in India. Jet fuel accounted for 40%—45% of airlines’ total operating costs. This percentage will now change majorly and make operations unviable for weak players.What airlines will do: Airlines will hike fares to reflect the increased operating costs. This will have an impact in demand and leading to cutting of flights. Airlines are watching each route closely to see if operating that makes economic sense or not. IndiGo, Air India group, Akasa are among the airlines that had last month imposed or hiked fuel surcharge which now range from Rs 150 to $200. Now the same may be revised. The fare cap of Rs 18,000 for domestic flights was removed on March 21, 2026. Since airlines have not got any fiscal relief on ATF excise (from Centre) or VAT (from some places like Delhi and Mumbai), they had categorically asked the govt to cap airfares only if their costs can be similarly capped too.Air India CEO Campbell Wilson had last month said in a mail to employees that “the financial impact of (Iran war) crisis is yet to be fully felt, as although the spot price of jet fuel has more than doubled, most of the impact will only hit us from next month.” He had warned escalating operating costs may force more airlines to cut flights “depending on how fuel costs, airfares and customer demand moves.” The rupee touching new life-lows on a daily basis adds to the dollar-denominated costs of airlines, including fuel for international flights of Indian carriers. On top of that routes to and from the west have become much longer.While airlines have introduced or hiked fuel surcharge, Wilson had said “not every customer is willing to pay higher airfares so there is a limit to how high we can price before demand drops. Additionally, given economic uncertainties, it is not certain that customers or companies will be as willing to travel as they were prior to the conflict, and may choose to stay put for a while.”“There will be pockets of new demand, such as we’re seeing on – and deploying additional flights to -some Europe and North America cities, but already airlines in some parts of the world are reducing some flights due to high fuel prices. Depending on how fuel costs, airfares and customer demand moves, we may also have to adjust,” Wilson had said. Go to Source
