IndiGo stock rises over 2% after airline introduces fuel surcharge on airfares

IndiGO Share Price: Shares of InterGlobe Aviation, the parent company of IndiGo Airlines, were trading higher by 2.11 per cent, or Rs 52.15, at Rs 2,526.85, in Friday morning deals, in the first trading session after the airline introduced a fuel surcharge on airfares. The stock that closed at Rs 2,474.70 on Thursday started the trading session on Friday at Rs 2,550 to jump to the day's high of Rs 2,563.90.

IndiGo announced on Thursday that it would impose a fuel surcharge of Rs 300–Rs 1,000 starting Friday on domestic and international flights.

With the surcharge, flight ticket rates are estimated to go up by Rs 1,000.

What we know about IndiGo's fuel surcharge

• A fuel surcharge of Rs 300–Rs 1000 will be imposed from Friday (October 6).
• Sources told Zee Business that other airlines are also preparing to impose surcharges soon.
• The surcharge has been imposed due to a continuous increase in ATF prices in the last four months.
• ATF accounts for 40 per cent of the airline's operating expenses.
• These are the highest rates since December 2022 (Rs 1,17,587/KL)

How increased ATF prices will affect airlines' finances

• A $1 increase in ATF prices is expected to reduce the profit margins of companies by 0.5 per cent to 0.7 per cent. 
• A company's expenses increase despite rupee weakness
• Festive and travel seasons last from October to December
• The surcharge will be decided according to distance

 
Sector distance (in km)    Fuel surcharge

0-500                               Rs 300  
501-1000                         Rs 400
1001-1500                       Rs 550
1501-2500                       Rs 650
2501-3500                       Rs 800
3501-Above                     Rs 1,000

ATF Price Trend

Date       Price/KL           Change (%)    
1 Oct      Rs 118199        +5.1%  
1 Sept    Rs 112419        +14.1%  
1 Aug     Rs 98508           +8.4%  
1 Jul       Rs 90857           +1.7%  
1 Jun     Rs 89303            NA