Airfares could rise by 15-20% during the upcoming festival season with global crude oil prices jumping 12% due to drone strikes on world’s largest oil producer Saudi Aramco, according to experts and travel industry executives.
Aviation turbine fuel (ATF) comprises nearly 40% of total costs of airline operations. Around 70% of the total domestic ticket bookings take place in 0-28 days’ travel window. The festival season starts with Navratras from September 29 and run up to Diwali on October 27.
Domestic ATF prices stood at Rs 63,295 per kilolitre in Delhi. The current prices are down around 8% year-on-year but things could change quickly. Experts believe that the impact of the Aramco incident is expected to continue for next three months. “The Aramco refinery attack clubbed with the weak rupee on the dollar should raise jet fuel prices by 15-18% per litre, depending on the states. We expect similar increase in base airfare in the coming days. Clearly, this doesn’t appear positive for the sector given that festival season is just round the corner; and the burden will be on end traveller,” said Mark Martin of Martin Consulting.
Global oil supplies were disrupted after Aramco’s oil facilities were targeted by drones attack. According to Bloomberg, Brent crude jumped $12 per barrel on Monday to around $72 per barrel.
Travel industry executives pointed out that airlines would be forced to pass on some of the increased costs on to the passengers depending on how long the latest crude crisis continue.
17/09/19 Arun Nayal/Financial Express
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Aviation turbine fuel (ATF) comprises nearly 40% of total costs of airline operations. Around 70% of the total domestic ticket bookings take place in 0-28 days’ travel window. The festival season starts with Navratras from September 29 and run up to Diwali on October 27.
Domestic ATF prices stood at Rs 63,295 per kilolitre in Delhi. The current prices are down around 8% year-on-year but things could change quickly. Experts believe that the impact of the Aramco incident is expected to continue for next three months. “The Aramco refinery attack clubbed with the weak rupee on the dollar should raise jet fuel prices by 15-18% per litre, depending on the states. We expect similar increase in base airfare in the coming days. Clearly, this doesn’t appear positive for the sector given that festival season is just round the corner; and the burden will be on end traveller,” said Mark Martin of Martin Consulting.
Global oil supplies were disrupted after Aramco’s oil facilities were targeted by drones attack. According to Bloomberg, Brent crude jumped $12 per barrel on Monday to around $72 per barrel.
Travel industry executives pointed out that airlines would be forced to pass on some of the increased costs on to the passengers depending on how long the latest crude crisis continue.
17/09/19 Arun Nayal/Financial Express
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