Jet Fuel Prices are at record high, will airlines raise airfares again?

BusinessJet Fuel Prices are at record high, will airlines raise airfares again?

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Jet Fuel Prices are at record high, will airlines raise airfares again?

New Delhi: Amid the Ukraine –Russia war and the demand-supply gap is the main reason behind the exorbitant rise of crude and (Aviation Turbine Fuel (ATF) in India and across the globe. With jet fuel prices currently hovering around an all-time high, the aviation industry is facing the heat to manage its operation. According to a study, Indian aviation industry may face a revenue decline of about Rs 25,000 crore for the financial year 2021-22.

Read also: Russia plans to fine Google over Ukraine war videos

The price of ATF, which comprises over 45% of an airline’s operational cost, jet fuel which was traded at Rs. 76/ litre on January 1 in Delhi has now reached to Rs 112.9/litre on April 1. ATF prices are revised twice a month, on 1st and 16th of every month.

Read also: Congress MPs protest against fuel price hike

The recent price hike will further push airlines to raise fares which will ultimately hit their profit margins, which are already stressed due to the COVID-19 pandemic shutdown. In a recent report, rating agency ICRA, maintain its ‘negative’ credit outlook on the Indian aviation industry, due to increased ATF prices and COVID-19 overhang. ICRA states that high crude prices coupled with relatively low capacity utilisation of aircraft fleet will weigh on profit margins of airlines in the coming fiscal as well. However, progress in peace talks will be seen as a sigh of relief by the Indian carriers. Since India imports its 85 percent oil requirements. Amid the rising fuel prices, some industry voices are demanding that ATF fuel prices should be brought into GST tax net, to make the operations of airlines more affordable and viable

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