Following the increase in prices of aviation turbine fuel (ATF)—or jet fuel—from April 1 amid the West Asia war, the Air India group on Tuesday hiked the fuel surcharge on all domestic routes of over 1,000 km, with most international routes seeing a much steeper hike. India’s largest airline Indigo had announced changes in fuel surcharge on similar lines on April 1.
This move by Air India and IndiGo, which will make flying costlier on most routes, is in line with the decision by the government and public sector oil marketing companies (OMCs) to pass on only a fraction of the actual increase in jet fuel prices for domestic flights of scheduled airlines, while effecting the full price hike of over 100% for international flights.
As ATF prices surged in the international market due to the raging war in West Asia, the Air India group, which includes full service airline Air India and budget carrier Air India Express—had introduced a flat fuel surcharge of Rs 399 for all domestic routes from March 12. As per the latest revision, which will be effective from 09:01 am on Wednesday (April 8), the flat surcharge on domestic flights has been replaced with a distance-based tiered structure varying between Rs 299 and Rs 899.
For most of the airline group’s international flights beyond South Asia, the surcharge has been hiked from the earlier range of $10-200 to $50-280. Except for flights to Europe, UK, North America, and Australia, where the revised surcharge will take effect from April 10, other overseas routes will see the revised levy from 09:01 am on Wednesday.
According to the Ministry of Petroleum and Natural Gas (MoPNG), given the surge in international prices of jet fuel, the price in India was expected to more than double from April 1, but only a “partial and staggered” increase was passed on for scheduled domestic airlines. For overseas flights, however, airlines have to pay the full market-linked price for ATF. Non-scheduled operators, like private charter operators, will also have to pay the full price.
The price of ATF in Delhi had jumped almost 115% month-on-month to a record Rs 2.07 lakh per kilolitre as of early morning on April; it revised downwards specifically for scheduled domestic airlines to Rs 1.05 lakh, higher by just 8.6% from March levels. For airlines on international run, the price of ATF in Delhi jumped 107% to $1,690.81 per kilolitre.
As per the latest data published by the International Air Transport Association (IATA), the global average jet fuel price jumped to $195.19 per barrel for the week ending 27 March from $99.40 at the end of February. The crack spread—difference between the price of crude oil and products like ATF derived from it—trebled to $81.44 per barrel for the week ended March 27 from $27.83 for the week ended February 27.
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“This steep rise compounds the impact of rising crude oil prices, creating one of the most challenging fuel cost
environments that airlines globally have faced in recent years,” Air India said regarding the steep hikes in fuel surcharge on international flights.
Jet fuel accounted for over 40% of Indian airlines’ operating costs even before the war and industry insiders had cautioned that a significant jump in fuel prices and the consequent surge in airfares could lead to demand destruction, forcing airlines to cut flights on routes that see a fall in passenger footfalls. MoPNG, MoCA, and the OMCs were in talks on ATF pricing in view of the global price surge amid the West Asia war.
“The fuel surcharges on international routes do not compensate for the exponential increase in jet fuel prices for international flights. Air India continues to absorb a significant portion of this increased cost…Air India will review its surcharges periodically and make appropriate adjustments as the situation requires,” the airline said.
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Details of changes in fuel surcharge by Air India group
Instead of the flat levy of Rs 399 for domestic flight tickets, Air India will now have a distance-based surcharge: Rs 299 for distance up to 500 km (like Delhi-Jaipur), Rs 399 for 501-1,000 km (like Delhi-Ahmedabad), Rs 549 for 1,001-1,500 km (like Delhi-Mumbai), Rs 749 for 1,501-2,000 km (like Delhi-Bengaluru), and Rs 899 for over 2,000 km (like Delhi-Thiruvananthapuram).
As for international flight tickets, those to and from the neighbouring SAARC countries, excluding Bangladesh, will attract a surcharge of $24 against the earlier levy of Rs 399. “Revisions to fuel surcharge on flights to and from Bangladesh and Far East destinations, namely Japan, Hong Kong, and South Korea, will be advised in due course subject to the requisite regulatory approvals,” Air India said.
For West Asia flights, the surcharge has been hiked to $50 from $10, while for Southeast Asia flights, except those to and from Singapore, the surcharged has been hiked to $100 from $60; for Singapore flights, it will continue to be $60.For Africa flights, the new surcharge is $130 against $90 earlier, while for the UK and Europe, it has jumped to $205 from $125. For flights to and from North America and Europe, Air India will levy a fuel surcharge of $280, up 40% from the current charge of $200.
