ATF bug bites airlines again, 10% fare hike likely soon

Mumbai: Domestic airlines are contemplating airfares hike by increasing the fuel surcharge component in a fortnight due to rise in operational costs. After hitting a two-year low, airfares are likely to rise by 10% in September.
ATF prices in the domestic market have gone up by 50% from the lows of March.
Global crude price is hovering near $73 a barrel and hardly any chance to come down immediately leading to fares hike in the current month, said an industry analyst with domestic brokerage firm. Airlines will have to increase fares to minimise the gap and to achieve break-even . The steady rise in aviation turbine fuel (ATF) prices has made it tough for the airline industry to stay afloat without hikes in fares, he added.
“We are getting feelers of about an Rs 300 increase in fuel surcharge by low-cost and full service carriers in September,” said travel agents in Mumbai and Delhi. Post this expected hike, a ticket on the Mumbai-Delhi route will cost around Rs 2,500 on budget airlines and Rs 2,800 on full service carriers—these are all-inclusive fares.
Carriers have no option left but to hike fares even in a price-sensitive market. Industry trackers pointed out that the reluctance of states to reduce sales tax on ATF has been the trigger for the proposed fare hike in September. Earlier, the civil aviation ministry and airline companies had sought the inclusion of ATF in the “declared goods” list.
02/09/09 Mithun Roy/Economic Times

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Categories: Indian Aviation- In General Sep 2009