Leading domestic airlines demanded a rollback of a sudden 12 per cent hike in aviation turbine fuel (ATF) prices announced by oil companies on Tuesday and warned that they would be compelled to approach the Competition Commission of India (CCI) on such “non-transparent” changes.
Aviation fuel costs account for over 40 per cent of an airline’s cost of operations, and hence could impact air fares. The government said that part of the hike in ATF prices was due to an increase in excise duty on aviation fuel, announced in the Union Budget.
“Out of the total 11.5 per cent hike, five per cent increase is on account of an increase in the input costs of ATF and the rest 6.5 per cent is on account of excise duty (hike on ATF),” Civil Aviation Secretary RN Choubey told The Hindu over telephone.
The civil aviation secretary said that despite the duty hike on aviation fuel, it is “significantly cheaper” than petrol and diesel at present. But the Federation of Indian Airlines (FIA), which represents key airlines IndiGo, SpiceJet, Jet Airways and GoAir, demanded a rollback in the hike and sought the constitution of an independent regulator for ATF pricing.
“In March 2016, FIA members have been informed of a 12 per cent increase in prices without any explanation. No response has been received from oil companies regarding this price revision and oil pricing continues to be non-transparent, to the detriment of consumers and citizens,” the FIA said in a letter to Oil Minister Dharmendra Pradhan, Civil Aviation Minister Ashok Gajapathi Raju and Finance Minister Arun Jaitley. Civil Aviation Minister Ashok Gajapathi Raju said a 35 per cent drop in aviation fuel had helped airlines to offer over 18 per cent lower passenger fares in 2015.
03/03/16 Somesh Jha/The Hindu
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Aviation fuel costs account for over 40 per cent of an airline’s cost of operations, and hence could impact air fares. The government said that part of the hike in ATF prices was due to an increase in excise duty on aviation fuel, announced in the Union Budget.
“Out of the total 11.5 per cent hike, five per cent increase is on account of an increase in the input costs of ATF and the rest 6.5 per cent is on account of excise duty (hike on ATF),” Civil Aviation Secretary RN Choubey told The Hindu over telephone.
The civil aviation secretary said that despite the duty hike on aviation fuel, it is “significantly cheaper” than petrol and diesel at present. But the Federation of Indian Airlines (FIA), which represents key airlines IndiGo, SpiceJet, Jet Airways and GoAir, demanded a rollback in the hike and sought the constitution of an independent regulator for ATF pricing.
“In March 2016, FIA members have been informed of a 12 per cent increase in prices without any explanation. No response has been received from oil companies regarding this price revision and oil pricing continues to be non-transparent, to the detriment of consumers and citizens,” the FIA said in a letter to Oil Minister Dharmendra Pradhan, Civil Aviation Minister Ashok Gajapathi Raju and Finance Minister Arun Jaitley. Civil Aviation Minister Ashok Gajapathi Raju said a 35 per cent drop in aviation fuel had helped airlines to offer over 18 per cent lower passenger fares in 2015.
03/03/16 Somesh Jha/The Hindu
