Air travel becomes costlier

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Air travel became costlier on Tuesday with major Indian carriers hiking fuel surcharge on tickets, ranging from Rs 150 to Rs 250 for domestic travel and USD 15 (Rs 825) for a one-way international ticket, following an almost eight per cent increase in jet fuel prices.

While Air India introduced the increased fuel surcharge on Tuesday itself, Jet Airways and its subsidiary JetKonnect would raise it from Wednesday, officials of both airlines said.

Under the new regime, an increase of Rs 150 in the surcharge would be applicable on all sectors less than 1,000 kms and Rs 250 for those beyond that distance. A blanket hike of USD 15 would be effected on all one-way international tickets.

The domestic fuel surcharge for a distance of over 1000 kms so far was Rs 3250, which would now go up to Rs 3500. The surcharge so far was Rs 1600 on a ticket for less than 1000 km distance.

A Jet Airways spokesperson said the hike in fuel surcharge would be effective from Wednesday, while an Air India official said the increase has been effected on all bookings from Tuesday.

Officials of no-frill airlines, like IndiGo and SpiceJet, remained tight-lipped about when they would give effect to the hike but were of the opinion that this steep rise in jet fuel prices would hit their financial bottomline.

"We are studying the impact of a steep hike of aviation turbine fuel prices on our operational costs which are high in any case. We are studying the situation and may take a decision soon," one of the airline officials said, requesting anonymity.

The increase in fuel surcharge was neccesitated following the steep rise in the price of aviation turbine fuel by 7.6 per cent last week, the officials said.

In the fourth straight increase in rates since July, oil marketing companies last week hiked ATF price by a steep 7.6 per cent to an all-time high of Rs 72,282 per kilolitre.

Jet fuel constitutes almost 50 per cent of an Indian carrier's operating costs, compared to 20-25 per cent globally.

This is primarily due to the high taxes on ATF by the states - ranging from four per cent to 30 per cent. Though international airlines operating to India are exempted from state-level taxes, they also pay nearly 16 per cent more than the global average when their aircraft fill in their tanks here.

Airline companies have been demanding reduction in taxes and have also sought and received permission from the government to import ATF directly.

Government has given permission to Kingfisher Airlines, SpiceJet, IndiGo, Go Airlines and Air India. High airfares have been a major reason for domestic air travel to record its steepest fall in seven years in July when 45.4 lakh people flew, 10 per cent less than 50.4 lakh recorded in the same month last year.

While airlines blame the high fares on rising fuel cost and hike in user development fees in Delhi and Mumbai, air travel estimates for 2012-13 have forecast that passenger traffic growth this year would slow down from 11 per cent, projected earlier, to seven per cent.