IndiGo Announces Fuel Surcharge To Counter Rising Oil Prices
Passengers flying IndiGo should get ready to shell out more. India’s largest airline will charge up to Rs 400 more for domestic flights to offset higher international oil prices and jet fuel costs.
“A sum of Rs 200 will be added on routes less than 1,000 km distance, and Rs 400 on routes longer than 1,000 km distance,” the airline’s parent InterGlobe Aviation Ltd. said in a media statement. The fuel surcharge will come into effect from May 30.
Fuel prices in India have been rising for more than two weeks now, triggered by a rally in global oil rates that took the benchmark Brent crude to the $80 mark for the first time since 2014. Even as the rally stalled this week, fuel prices continued to rise with the Narendra Modi-led administration yet to come up with a policy response.
Aircraft fuel is the single largest expense for IndiGo, accounting for about 40 percent of the airline’s cost of operations, the statement said. Besides, a depreciating rupee has added to costs, it added. “Given this scenario, for a low-cost airline, levying a surcharge has become inevitable.”
With ATF prices in India having risen around 25 percent in the current month compared to the same period last year, and at the highest in last three years, the airline is compelled to pass some of the increased cost burden to customers as a fuel surcharge.Sanjay Kumar, Chief Commercial Officer, IndiGo
Fuel surcharges have been a contentious issue for Indian airlines. Earlier this year, the antitrust regulator Competition Commission of India had imposed a collective fine of Rs 55 crore on three airlines including IndiGo for concerted action in fixing and revising fuel surcharge on cargo transport.
IndiGo remains confident that the increase in airfares due to fuel surcharge would not adversely impact air-traffic demand. “This move of reintroduction of fuel surcharges will not much impact the low fares that are being charged, and will not change IndiGo’s positioning as a low cost carrier,” Kumar said in the media statement.
IndiGo will review the surcharges “in the light of oil prices going forward” and would try to withdraw it once prices moderate, the statement added.