IndiGo to increase air fares by introducing fuel charges up to Rs. 1000

06 Oct 2023

IndiGo to increase air fares by introducing fuel charges up to Rs. 1000

Air travel costs within the country are expected to increase as IndiGo announced on Thursday, 5 October, 2023, the implementation of a fuel surcharge. This charge can amount to up to Rs. 1,000, depending on the distance of the flight. IndiGo is implementing this move in response to the increase in aviation turbine fuel (ATF) prices over the past three months.

The time between October and December is considered the peak travel season for the Indian aviation sector. The timing of the introduction of the fuel surcharge coinciding with the peak travel season is a strategic step taken by IndiGo and will impact its passengers.

Aviation turbine fuel (ATF) expenses constitute the most substantial portion of Indian carriers' expenditures, accounting for approximately 45% of their total revenue. During the period from 1 June, 2023 to 1 October, 2023, ATF prices experienced a significant increase, rising by 32.4% to reach Rs. 1.18 lakh per kiloliter (kl) in Delhi.

Some aviation experts have suggested that there is a possibility that some other domestic airlines may follow IndiGo's lead and introduce fuel surcharges to their airfares. On the other hand, a Vistara spokesperson stated that the airline has no plans to introduce any such additional component in its airfares.

According to the fuel surcharge system implemented by IndiGo, an amount of Rs 300 will be charged for flights ranging from 500 km to 500 km and Rs 400 for flights ranging from 501 km to 1,000 km. This pricing structure will be included in all flight categories, with flights covering distances of 3,501 km and beyond costing a fuel surcharge of Rs 1,000. An official from IndiGo noted that approximately 60% of the airline's flights fall within the 0-1,000 km range.

IndiGo has previously introduced a fuel surcharge as a response to a significant rise in ATF prices. This move was first implemented in May 2018 but was later discontinued when fuel prices decreased.

In a statement released on Thursday, 5 October, 2023, IndiGo announced that it would be implementing a fuel surcharge on both domestic and international flights starting at midnight on 5 October, 2023. The new pricing structure would

mean that passengers booking IndiGo flights will now encounter a fuel surcharge for each sector, determined by the distance of the sector.

Rajiv Mehra, the honorary secretary of the Federation of Associations of Indian Tourism & Hospitality, expressed that any rise in airfares is unfavorable for travelers and constitutes a "double blow" just ahead of the festival season.

Indian Oil Corporation, Bharat Petroleum Corporation Ltd., and Hindustan Petroleum Corporation Ltd., which are government-owned entities, adjust aviation turbine fuel (ATF) prices on the initial day of each month, taking into consideration the average international price from the previous month.

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