Air India is introducing new fuel surcharges on both domestic and international flights in response to the soaring costs of Aviation Turbine Fuel (ATF), impacting passenger fares.
Key Points
- Air India is implementing fuel surcharges ranging from Rs 299 to Rs 899 for domestic flights and $24 to $280 for international flights, effective April 8.
- The fuel surcharge revision also applies to Air India Express flights.
- The decision follows the government's capping of domestic Aviation Turbine Fuel (ATF) price hikes at 25 per cent, prompting Air India to adopt a distance-based surcharge grid.
- Global average jet fuel prices have surged nearly 100 per cent, reaching $195.19 per barrel, significantly impacting airline operational costs.
- Rising crude oil prices and refinery margins ('crack spread') have created a challenging fuel cost environment for airlines globally.
The Air India group on Tuesday said it will impose fuel surcharge ranging from Rs 299 to Rs 899 for domestic flights and $24 to $280 for international flights (excluding some routes).
The revised fuel surcharge, effective from April 8 will be applicable for flights operated by the airline's low-cost subsidiary Air India Express as well, Air India said in a statement.
Revisions to fuel surcharge on flights to and from Bangladesh and Far East destinations such as Japan, Hong Kong, and South Korea, will be advised in due course subject to the requisite regulatory approvals, it said.
Following the government's decision to cap domestic Aviation Turbine Fuel (ATF) price hike at 25 per cent, Air India group has adopted this calibrated approach, transitioning from a flat domestic surcharge to a distance-based grid, the airline said.
Further, in the absence of any mitigation on international ATF prices, the Air India group will be implementing more significant changes to fuel surcharges.
The other domestic carrier IndiGo has already revised an upward revision in fuel surcharge.
Impact of Rising Jet Fuel Prices
Citing latest International Air Transport Association (IATA) data, the airline said the global average jet fuel price rose to $195.19 per barrel for the week ending March 27, up from $99.40 at the end of February, recording a surge of close to 100 per cent.
ATF accounts for almost 40-45 per cent of an airline's total cost.
ATF, produced by refining crude oil, has seen simultaneous increases in both its crude oil component as well as the refinery margin, known as 'crack spread', with the latter having nearly tripled within three weeks.
It increased from $27.83 per barrel for the week ending February 27 to $81.44 for the week ending March 27, Air India said, adding this steep rise compounds the impact of rising crude oil prices, creating one of the most challenging fuel cost environments that airlines globally have faced in recent years.
The fuel surcharges on international routes do not compensate for the exponential increase in jet fuel prices for international flights.
Air India continues to absorb a significant portion of this increased cost, the company said.
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