Amidst the recent rise in jet fuel prices, SpiceJet has called for a hike in airfare prices by a minimum of 10-15 percent. Following a 16.3 percent hike on Thursday, jet fuel prices or Aviation Turbine Fuel (ATF) touched a record high. ATF is available to airlines at Rs 1.41 lakh per kilolitre. From Rs 72,062 per kilolitre at the start of this year, the ATF prices have doubled in the last six months. Reacting to the fuel price hikes and the weakening of the rupee against dollar prices, SpiceJet’s chairman and managing director Ajay Singh called for a 10-15 percent increase in fared to ensure a sustainable operation cost for airlines.
“The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares and we believe that a minimum 10-15% increase in fares is required to ensure that cost of operations are better sustained,” Singh said in a statement.
Pointing out that the massive 120 percent hike in air-fuel prices since June 2021 was not sustainable for the aviation industry, Singh urged the government to take “urgent action” to reduce taxes on the ATF which are amongst the highest in the world.
“We have in the last few months tried to absorb as much burden of this fuel price rise, which constitutes more than 50% of our operational cost, as we could,” Singh added.
Indigo also expressed concerns over the rising fuel prices and said that situation was “unfavourably impacting the aviation sector.”
The airlines urged the government to cut taxes and bring ATF under GST so that the benefit of the input tax credit can be availed.
“To facilitate recovery of the aviation sector and to make flying viable for everyone, we would request the government to at least bring ATF under GST so that the benefit of the input tax credit can be availed,” read the IndiGo statement.
The airline said the constant increases in crude oil prices and depreciation in the rupee are unfavorably impacting the aviation sector.
The continuous spike in ATF prices comes in the backdrop of the effect on the supply chain due to Russia’s invasion of Ukraine. The spike in air travel demand after easing restrictions from pandemic-related restrictions has also fuelled this sharp spike in ATF prices.