ATF price hike to hit travel and aviation industry

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The rebound of aviation and travel industry is set to brace an impact, owing to the sharp rise in prices of Air Turbine Fuel (ATF), which would result in air fares going up. However, it won’t be to the extent that would keep airlines from recovering the cost of their operations, The Economic Times reported on Tuesday. Oil companies increased the ATF prices by 13.9% as against that in October to Rs 82,638 per kilolitre in Delhi, on Monday.

Jet fuel prices are about 95.8% higher than in November 2020, with this increase. According to airlines, jet fuel prices account for up to 40% of the total cost of operations in India, one of the highest in the world.

Fares are high on routes with demand from leisure travellers

According to the publication, the rise in fuel prices and the decline in rupee value are set to impact the airline sector hard, especially at a time when the industry is coming out of the Covid-19 crisis.

The high fares are on the back of a surge in demand for flights from leisure travellers as well as visiting friends and family traffic, says a travel industry watcher.

Travel Agents Federation Of India (TAFI) said that the fares are high and are going through the roof on routes with demand from leisure travellers. With this kind of structure, the aviation and travel sectors will never revive, it added.

Fares are expected to go up further, with the new hike in ATF and add to it the overall impact of petrol and diesel prices.

However, competition and predicted losses would make it difficult for airlines to pass on the increase in cost of passengers.