Airfares go up as oil cos raise ATF prices

New Delhi : There's simply no escape from price hikes, whether on ground or in air. Airlines have started raising fares after oil companies hiked aviation turbine fuel (ATF, jet fuel) prices. India's largest airline Jet has increased fuel surcharge by Rs 200 on its domestic flights from Saturday. Other domestic airlines are going to follow suit, but in a staggered manner over next few days to avoid charge of cartelization.

"This (hike) will be applicable on all flights of Jet Airways, Jet Konnect and JetLite, for sale and travel effective Saturday," a statement by Jet said. Other airlines did not offer comment but industry sources said domestic fares are going to rise in coming days.

However, the pinch could be more than Rs 200 effectively in the coming festive season. While airlines announce hikes in fuel surcharge when jet fuel gets dearer, price movement in basic fares follows a complex bucket system, which keeps going north as seats get sold. So in peak travel season when the demand is high, basic fares would be at the higher levels too. Compounded with higher fuel surcharge, flyers can look forward to substantially costlier air tickets.

The hike is coming at a time when the slowdown in the West is affecting air travel again. "A slowdown is again getting visible in international travel. If domestic fares rise, then even travel within the country may get affected. Fortunately, the slowdown is so far nowhere near the 2008 lows on international side. But we are keeping our fingers crossed," said Benson Samuel, director of Riya Travels.

A senior full service airline official said Thursday's ATF hike will mean an extra expense of Rs 5 crore per month on fuel bill. "This calls for a Rs 75-100 hike in fuel surcharge. Unlike other industries, airlines don't have a cost plus pricing mechanism. Our fares are determined by market forces of demand and supply. That's why almost all big airlines are losing money and some well-run smaller entities that haven't so far spread their wings far and wide in international arena are making money," said the official.