Directorate General of Civil Aviation removes price cap on air fares
Aviation regulator Directorate General of Civil Aviation (DGCA) on Wednesday announced the removal of lower and upper limits on air fare in the country.
The OMC’s raised the prices of ATF on Friday.In the national capital, the price of jet fuel was raised to Rs 1,12,924.83 per kilolitre (kl) from Rs 1,10,666.29 per kl.
In the other metro cities of Kolkata, Mumbai and Chennai, the price was increased to Rs 1,17,353.71, Rs 1,11,690.61 and Rs 1,16,583.71 per kiloliter, respectively.
“ATF prices have increased by around 50 per cent since the start of the year, major reason being the increase in crude prices led by the the Russia-Ukraine tensions,” said Bhanu Patni, Senior Analyst, India Ratings and Research.
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“The jet fuel spreads have also increased due to the global demand pickup.”
Notably, the hike is expected to impact air fares as well as airlines’ financial position that are under stress.
“With ATF becoming costlier, flight prices have doubled across some popular routes in the past few weeks,” said Aloke Bajpai, Group CEO & Co-founder, ixigo.
“Travellers will need to book in advance for their upcoming trips if they want to get the best possible prices. Hopefully the high demand for summer travel that the industry is witnessing will help offset fuel costs.”
In India, OMCs revise jet fuel prices on a fortnightly basis.
At present, fuel-based expenses account for over 35 per cent of the overall operating cost of an airline.
India presently has some of the world’s highest rates of taxation on he ATF, which massively drives up the fuel cost component.
The industry has been urging the Centre to include the fuel type in the ambit of GST, similar to the status given to ‘Bunker Diesel’ which is used in the shipping sector.
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