Domestic and international air travel will become more expensive as the price of Aviation Turbine Fuel (ATF), often known as jet fuel, keeps rising. ATF accounts for 40% of an airline's operating costs.
After a 16.3% increase, the price of ATF reached an all-time high of Rs 1.41 lakh per kilolitre in New Delhi on Thursday. ATF prices have risen by 91% in the first half of 2022. Airlines claim that raising rates is their only alternative to deal with growing prices and a falling rupee, both of which add to their operating expenses.
Ajay Singh, Chairman and Managing Director of SpiceJet, told TOI that present pricing are "unsustainable" and that airlines will have to raise costs by at least 10-15 %.
Oil marketing companies (OMCs) continued to raise ATF prices despite leaving politically sensitive gasoline and diesel prices unchanged. The government raises the VAT and charge on jet fuel even further, making it the most costly in the world.
Jet fuel accounts for 50% of SpiceJet's operating expenditures, according to Singh, and prices have jumped 120 % since June 2021. He also pushed the federal and state governments to lower ATF pricing, which he claimed are among the world's highest.
Domestic flight fares have already risen by 20% on average in the previous two months as airlines pass on the expense of higher fuel to passengers.
