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Flying to cost more from June

With global oil prices rising by 11 per cent, airlines are expected to increase the fuel surcharge by around Rs 400, reports Lalatendu Mishra.
Hindustan Times | By Lalatendu Mishra, Mumbai
UPDATED ON MAY 23, 2008 11:39 PM IST

If you’re planning to fly for a holiday this summer, be prepared to pay more. Come June, domestic airlines are planning to raise fares by around Rs 400 per flight. With global oil prices rising by 11 per cent during the last one week, airlines are expected to increase the fuel surcharge by around Rs 400.

Airlines have introduced fuel surcharge more than a year ago to make up for the additional expenses caused by rising aviation turbine fuel (ATF) bills. ATF or jet fuel prices moves up in proportion to rising crude oil prices. International crude oil prices are now hovering between $133 and $135 per barrel due to factors like weak dollar and surging demand.

“We expect the fuel surcharge to go up by around Rs 400,” said a senior Jet Airways official, who requested anonymity since he’s not authorised to speak to the press. “It is premature to reveal the exact amount unless oil companies announce the revised ATF prices.

Jet Airways CEO Prock-Schauer was unavailable for comments.

On the last day of every month, oil marketing companies like Indian Oil, Hindustan Petroleum and Bharat Petroleum announce fresh prices of ATF for the next month based on the purchase prices of crude oil. Airlines are expecting a steep hike this time.

“Neither the airline industry nor passengers have any capacity to absorb addition burden,” said Kapil Kaul, CEO (India), Centre for Asia Pacific Aviation, an aviation consultancy. “All airlines have extremely weak balance sheet due to the unprecedented rise in jet fuel bills and lower yields. It is high time the government reduced sales tax on ATF to 4 per cent to make air travel affordable and to prevent long term damage to the entire air transport value chain.”

At the moment, air passengers are paying fuel surcharge of Rs 2,350 for long-haul routes which are beyond 750 km. They pay Rs 1,950 for short haul routes like Mumbai-Ahmedabad or Delhi-Jammu. This is in addition to the basic fares. Passengers are also charged Rs 150 as congestion surcharge and Rs 225 passenger fee, which go to the airport authority’s kitty. In the next round of price hike, airlines may go for a differential fuel surcharge hike to provide solace to passengers flying short distances, who may have to pay a relatively lower surcharge.

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