Airfare hike likely as fuel costs Rs 2,000 more

With the fuel retailers hiking Air Turbine Fuel (ATF) rates to Rs 2,030 per kilolitre, flyers may have to pay more for the tickets should the airlines decide to pass off the burden to them.

The hike on ATF in New Year was the second after reduction in November when the rupee was stabilised.

The three fuel retailers –Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and BPCL—revise ATF rates on the first of every month based on the average international price in the preceding month.

According to Bharat Petroleum Corp Ltd (BPCL), the ATF will cost Rs 76,241.33 per kilolitre in Delhi in January, which is an increase of Rs 2,036.59 per kilolitre in December, when the rates were hiked by Rs 597.48 per kilolitre from November.

For five months since June, the ATF was rising due to rupee devaluation against the dollar. The jet fuel price had touched an all-time high of Rs 77,089.42 per kilolitre in October.

However, as the rupee regained its value against dollar, the ATF prices came down by 4.5 per cent only to rise in December.

Rates at different airports may vary because of difference in local sales tax or VAT. Jet fuel constitutes over 40 per cent of an airline's operating costs and the price hike will increase the fuel cost of the cash-strapped carriers.

Though airlines are silent about increasing fares, experts say they would be forced to effect a hike if fuel rates rise once again next month.

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