Mumbai : Those waiting to get cheaper air tickets with peak travel season end nearing may not get those ground-hitting prices any time soon. The reason being that government-owned oil companies increased the price of jet fuel by a steep 9.2% on Wednesday, the fourth such increase since February in line with the surge in global oil prices. Airlines are likely to pass on the fuel price surge to fliers.
"The increase in fuel price will surely force airlines to maintain high fares, which is not good for the passengers as well as for the aviation industry," said Iqbal Mulla, president of aviation and tourism consultancy group Global Tourism Council. None of the airlines was immediately available for comment. According to aviation industry analysts, the jump in jet oil prices will hit airlines' bottom line, and they then will hesitate to bring fares to the new normal, which generally happens after the end of the peak season in July. Jet fuel, also called as aviation turbine fuel (ATF), accounts for more than 40% of the carrier's operating cost. Prices vary from state to state depending on the sales tax.
Airlines will still lower fares during the non-peak season, but they will try to keep the rates in mind," said Irfan Khan, a travel industry insider. According to travel agents, the average fare during the non-peak season hover about 20-30% less than the peak season. For example, the average Mumbai-Leh fares was Rs12,212 during May this year which comes down to around Rs8,000-9,000 during the non peak season. Similarly, on Delhi-Port Blair route, the average fare last month was Rs9,147 which normally goes down to Rs7,000 on an average. Further, the airlines routinely come up with discount offers as Indigo, Spicejet, Air India, AirAsia, GoAir, where tickets were announced to have been sold on first-come-first-serve basis for as low as Rs511 as base price.
Oil companies began increasing prices this March after three cuts starting in December 2015. On March 1, the ATF price was marked up by 12%, followed by an 8.7% increase in April and a minor mark-up of 1.5% on May 1. The ATF price in Mumbai as on June 1 increased to Rs45,700.55 per kilolitre as against Rs41,756.16 on May 1. Similarly it stood at Rs 41,171.91 on April 9. On March 10, the price was declared at Rs 38,425.94 while the price was mere Rs 34,284.02 on February 1.
Airfares have been at a low level for the past more than a year due to dip in global oil prices. However, now, it is seeing some correction because of which most airlines in India have had a healthy balance sheet.