Air fares likely to go up after hike in aviation turbine fuel prices

Air passengers may have to spend more as oil marketing companies have increased the price of aviation turbine fuel (ATF).

ATF now costs Rs 63,472.22 per kilolitre in Delhi, up Rs 677 (over 1 per cent) from Rs 62,795 per kl last month, according to the notification by the Indian Oil Corporation. A similar hike in the prices was seen in Kolkata, Mumbai and Chennai.

"The 1 per cent increase in ATF price is expected to affect air travel especially ahead of the peak travel season," said Sharat Dhall, COO (B2C), Yatra.com.

"The prices may fluctuate in short to medium term. But with capacity expansion underway there might be stabilisation as we head further into the travel season," Dhall said.

The prices are revised on the first day of every month. 

Aloke Bajpai, CEO and Co-founder, Ixigo, said, "With peak summer travel season round the corner and an ongoing capacity crunch due to grounding of planes, hike in ATF can lead to an increase in last-minute fares and aggrevate the increasing airfare situation seen since February."

"But average domestic fares might normalise and even dip 15-20 per cent if attempts to get some grounded planes operational come through," Bajpai added. 

The aviation sector is already seeing flared-up fares due to capacity constraints caused by reasons like shortage of aircraft in the wake of grounding of Boeing MAX 737 globally over safety concerns and Jet Airways grounding several flights due to non-payment of dues.

Jet Airways might feel the pinch more given its ongoing struggle to stay afloat. Jet has been a prime example of the ongoing macro-economic factors affecting the airline business. From being a full-service airline with highest market share in India, it was on the brink of bankruptcy due to rising fuel costs, competitive pricing and competition from budget airlines.

Also read: From being India's top airline to near bankruptcy: The Jet Airways crisis explained