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Jet fuel price for international airlines hiked 5.3%, fares under pressure
Jet fuel prices for international airlines rose 5.33% to $1,511.86 per KL, adding pressure on fares as rising costs and airspace disruptions hit demand.
State-run oil companies raised jet fuel prices for international airlines by 5.33% on Friday, the second hike since April 1, even as domestic airline fares came under pressure from the cumulative impact of rising fuel costs and airspace disruptions.
Aviation turbine fuel prices for international carriers were raised by $76.55 per kilolitre to $1,511.86 per KL in Delhi, home to India’s busiest airport. There was no change in Aviation Turbine Fuel (ATF) prices for domestic airlines.
On April 1, the government said it had limited the domestic ATF increase to 25%, to ₹1,04,927 per KL, to shield passengers from a steeper fare shock. International operations bore the full market-linked increase.
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Earlier this week, the Federation of Indian Airlines, representing Air India, IndiGo and SpiceJet, warned the civil aviation ministry of flight cancellations in a letter saying airlines were on the verge of “stopping operations.” The FIA sought urgent intervention on what it called ad hoc ATF pricing that was rendering airline networks “unviable and unsustainable.”
Air India acknowledged it had raised airfares and imposed fuel surcharges to partially offset the surge in fuel costs, saying higher fares were affecting customer demand.
Data from the Directorate General of Civil Aviation (DGCA) showed passenger load factors dipped 0.87% across airlines in March compared to February, suggesting demand was beginning to soften.
An industry insider said Indian airlines were entering a difficult phase as higher international airfares, rising fuel costs and weaker overseas demand squeezed profitability, with stress likely to persist for at least two quarters.
International capacity was estimated to be down 20-25%, with India-UAE routes under particular pressure. Only select high-demand routes to the UK and parts of Europe could absorb higher operating costs. Domestic demand may support airlines until mid-June, after which the lean season and sustained fuel prices could lead to further capacity cuts and pressure on margins, the person said, requesting anonymity.
