Air India hikes fares by 10 per cent as ATF prices go up

New Delhi: Flag carrier, Air India, hiked air fares by at least 10 per cent soon after state-run oil companies hiked aviation turbine fuel (ATF) prices by 2.8 per cent on Thursday.

''ATF prices depend on demand and supply and the dynamics of the market. The market is extremely volatile currently. Air fares have to be hiked to meet the operational costs,'' said an Air India spokesperson.

With the hike, ATF prices in Delhi went up by Rs1,931.07 per kilo litre (kl), according to Indian Oil officials. The fuel would now be priced at Rs71,028.26 per kl from 1 August as against Rs69,097.19 per kl earlier. In Mumbai prices now stand at Rs73,673.56, as against Rs71,630.53 per kl earlier.

The fuel will cost $41.68 per kl more for international airlines refuelling at Delhi. The new rates for ATF for foreign lines who do not pay local sales tax, will be $1,290.58 per kl.

ATF prices are revised once a month, based on monthly average of global oil prices.

While a SpiceJet spokesman said that the carrier would evaluate the impact and decide fare hikes over the next few days, a spokesman for Jet Airways said that the carrier would take a decision by Friday.

Industry experts said that generally domestic carriers follow the lead of Air India in such matters.

State-owned Air India had hiked fares 19 June by at least Rs300 following an upward revision in the price of ATF.