Air Fares May Rise 10-15% Because of Rising ATF Cost
04/15/2010

Private carrier Jet Airways expects airfare to go up by 10-15 per cent by June as compared to January-March levels.

Online PR News – 15-April-2010 – – Private carrier Jet Airways expects airfare to go up by 10-15 per cent by June as compared to January-March levels. Currently, ATF (aviation turbine fuel) costs Rs 41,660 per kilolitre in Mumbai while it costs Rs 40,2841 per kilolitre in Delhi. ATF accounts for over 40% of the operating cost to any airline and is considered nearly 70% higher in India as compared to other Asian cities like Dubai and Kuala Lumpur.

Shiv Kumar, vice president, revenue management at Jet said, “The airline has seen volumes going up particularly in the domestic routes and it remains bullish for the next couple of months. However, the rising crude prices pose a concern for the airlines.”

Also, the Centre has delayed the decision to impose 12% service tax on economy class fares from April 1, as proposed in the Budget 2010-11. Airline operators say a fare hike, if it comes along, could be effective only from June 1, as per government orders. Currently, service tax is levied on only business class fares. Domestic airlines are expected to raise economy class fares by Rs 400-480 per ticket if the imposition of service tax on the base fare becomes applicable from June 1. However, airlines have requested the aviation ministry for a roll back of service tax.

Other airlines like Kingfisher Airlines, SpiceJet, Go Air and Paramount have not directly indicated a fare hike, but if the ATF price surges in the ensuing months, they will hike air fares, say industry experts.