Jet Airways, Kingfisher Airlines, Air Deccan, SpiceJet, GoAir and Paramount Airways have increased their fuel surcharge by Rs 50 following the rise in jet fuel prices. The total fuel surcharge now amounts to Rs 950 per ticket.
In addition, airlines are also charging Rs 150 as a congestion surcharge because of the excess fuel burn and additional burden on equipment and manpower caused by bottlenecks at major airports.
“We have decided to increase the fuel surcharge by Rs 50 from Tuesday itself. The increase is across all sectors,” said Jet Airways CEO Wolfgang Prock-Schauer. Jet Airways sells more than 30,000 seats a day.
Indian Airlines, which claimed the highest market share in May, is yet to take a decision on increasing the fuel surcharge. “We will decide in two days. Now that the competition has increased the surcharge we should also follow, but the decision will have to be cleared by the government,” said an airline executive asking not to be identified.
High jet fuel prices in India are a major concern for airlines, constituting as it does around 40 of operating costs. Every 1 per cent increase in fuel cost translates into a burden of 1.5 per cent on airlines by way of additional dealers’ commissions and more working capital.
Domestic jet fuel prices are linked to international oil prices, which have been volatile since the beginning of the financial year. Except in June, they have been rising constantly. “There is no certainly for the next month. They should remain at this level. But in winter prices are set to go up steadily,” said an oil industry analyst asking not to be named.
Indian airlines have suffered a loss of more than Rs 2,000 crore in the last two years and are fast reaching a consensus on gradually raising fares to reduce the bloodbath. Kingfisher Airlines Chairman Vijay Mallya, soon after picking up a 26 per cent stake in Air Deccan, announced that fares in the budget carrier would go up by Rs 500 per seat.
“Our customers are not price sensitive as we operate an all-business class and they will not mind paying extra,” said Paramount Airways CMD M Thiagarajan. But any increase in fares obviously affects passengers who flew their entire family of five from Mumbai to Kerala for Rs 10,000 only five months ago.