India’s low-cost carrier airline SpiceJet Limited hiked the fare prices by up to 15 per cent in order to counter soaring fuel prices and the depreciating Rupee against the US Dollar. The development comes even as the aviation turbine fuel prices are hiked to a record high of 16 per cent on Thursday.
Ajay Singh, the Chairman, and Managing Director, SpiceJet said, “The sharp increase in aviation turbine fuel (ATF) prices and the depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares. A minimum 10-15 per cent increase in air fares is required to ensure that cost of operations are better sustained."
Meanwhile, he also attributed the depreciation of the Rupee against the US Dollar to be another reason for the price hike. "The weakening of the Indian rupee against the US dollar further significantly impacts airlines as our substantial cost is either dollar-denominated or pegged to the dollar," Singh said.
Singh noted that the ATF prices have surged as much as 120 per cent since June 2021, while urging the state and central governments to reduce taxes on jet fuel.
Notably, on May 25, 2020, the Ministry of Civil Aviation had capped the upper and lower limits for domestic airfares following a two-month-long Covid-19 lockdown. While the lower limit was imposed to assist the airlines from the financial crunch, the upper limit was imposed so that passengers would not be charged a higher price.
Jyotiraditya Scindia, Minister of Civil Aviation had earlier told The Times Of India, “Air traffic has been reviving steadily after we removed all capacity caps. However, ATF prices are at all-time highs. I have persuaded states to cut tax on jet fuel but the same is yet to happen at big hubs of Delhi and Mumbai.”
“Cutting excise on ATF is under the finance ministry’s consideration. Till air traffic remains steadily healthy for a quarter and fuel prices fall, domestic fare caps will continue,” he had added.
Meanwhile, the jet fuel prices are on a consistent hike amidst the ongoing Russia-Ukraine war. This is the 10th time that the ATF prices have been hiked this year. The ATF prices, which are revised on the 1st and 16th of every month, make upto 40 per cent of an airlines operating costs.
The ATF prices have been increased by Rs 19,757.13 per kilolitre, or 16.26 per cent, to Rs 1,41,232.87 per kl (Rs 141.2 per litre) in the national capital, according to a price notification of state-owned fuel retailers.
(With inputs from agencies)