After IndiGo hikes prices, other airlines too may spoil your summer vacation

In a bid to offset rising oil prices, IndiGo has announced that it will levy a fuel surcharge of between Rs 200 and Rs 400 per passenger on domestic routes, thereby, becoming the country's first airlines to do so. The move is likely to encourage other airline services to follow the trend as domestic airlines have been witnessing nearly 30 per cent increase in aviation turbine fuel (ATF) over the last one year. The timing could not have been worse. This is the start of the summer vacation period and people would have been looking for last-minute getaways to exotic locations with their families. Now this segment of the travelling community is going to get very disappointed. Those who booked their tickets well in time can rest easy.
 
According to experts, jet fuel accounts for 45 per cent of an airline's cost of operations, therefore, air carriers could even think of hiking prices by up to 15 per cent. Although domestic airlines have refused to come on record on the issue, executives of some private carriers have reportedly said that a call on how to offset the increase in the ATF rates was yet to be taken. 
 
Nearly 30 per cent increase has been witnessed in ATF price over the last one year and about 25 per cent in just last six months. A private airline executive on condition of anonymity told PTI, "There is an increase of 25 per cent in the jet fuel prices from last November till date and this definitely calls for an increase in ticket prices to meet some of the increased costs. But the question is who will bell the cat." Well, it turns out IndiGo was the one that did it.
 
Commenting on the situation, Amber Dubey, partner and India head of aerospace and defence, KPMG, said, "We are expecting a 10-15 per cent increase in fares to partially compensate for the near-30 per cent increase in ATF prices over the last year." 
 
Notably, some state governments levy as high as 40 per cent VAT on the ATF, making jet fuel in India one of the costliest in the region. This has led to unprecedented rise in ATF prices triggering a call to bring it under the purview of the goods and services tax (GST).
 
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John Nair, head, business travel, Cox & Kings, stated that the airlines have managed to absorb much of the fuel hike in the last one year but now they may be forced to pass on the impact, at least partially, to the travellers.