Air travel to get expensive as jet fuel price jumps record 18%

The prices of aviation turbine fuel (ATF) have been increased for the sixth time since January 1, reaching the highest-ever mark of Rs 1 lakh per kl after crude oil prices surged to a 14-year high last week. Airlines are expected to increase fares by 4 to 15 percent on key routes in the next 15 days, say reports.

The latest hike in the fuel prices was of Rs 17,135.63 per kilo litre (kl) or 18 percent, making it the steepest hike ever. In Delhi, jet fuel prices went up to Rs 1,10,666.29 per kl, in Mumbai, it went up to Rs 1,09,119.83 per kl and in Kolkata Rs 1,14,979.70 per kl, while in Chennai, the fuel price was Rs 1,14,133.73 per kl.

ATF prices are revised on the 1st and 16th of every month based on the average international price of the benchmark fuel. The fuel accounts for about two-fifth of the total cost of running an airline. Since January, the ATF prices have seen a hike of Rs 36,643.88 kl or almost 50 per cent. The latest hike came after crude oil prices traded at $140 per barrel in the backdrop of fears of supply disruption amidst the Russia-Ukraine crisis.

According to aviation industry executives, the air fares are expected to go up in key routes such as Delhi-Mumbai, Delhi-Bengaluru, Delhi-Chennai, Delhi-Hyderabad and Delhi-Kolkata. The steepest hike is expected on the Delhi-Mumbai route where maximum capacity is deployed. However, on shorter routes like Delhi-Lucknow or Delhi-Jaipur, fares are not likely to be changed.

“Fares on shorter routes, which can be covered via road, need to be competitive or else we lose traffic,” said an industry executive to the Financial Express.

However, fuel retailers are viewing this as a temporary rise that is triggered by the Russia-Ukraine crisis causing a subsequent hike in global crude prices.

According to a senior BPCL official, the prices have seen an improvement in the past seven days and by the next fortnight they will soften.

“The cracks also came down significantly and even crude prices have softened. It is expected to be below the Rs 1-lakh-mark during the next fortnight,” he said to Business Standard.