New Delhi: Given the 1.45% increase in aviation turbine fuel (ATF) prices in December, air travel in India is predicted to become more costly. This is the second consecutive monthly price rise, coming after a 3.3% increase in November. Consequently, the increased gasoline prices indicated by oil corporations are anticipated to drive up the price of airline tickets.
The new prices are effective as of December 1st, and are as follows:
Delhi: ₹91,856.84 per kiloliter
Mumbai: ₹85,861.02 per kiloliter
Chennai: ₹95,231.49 per kiloliter
Kolkata costs ₹94,551.63 per kiloliter
The regular variations in ATF prices are mostly caused by global crude oil prices and currency rate movements. While a 4.58% and 6.3% cut in September and October, respectively, provided airlines with some reprieve, recent rises have undermined those gains.
Airlines in India are facing a difficult situation as fuel costs climb. While certain airlines may levy fuel surcharges, the highly competitive nature of the Indian aviation market limits their ability to fully pass these costs on to passengers. This might lead to decreased profit margins or higher ticket prices, especially during busy travel seasons.
The recent increase in jet fuel prices is mostly due to global factors such as changes in crude oil prices, geopolitical concerns, and currency movements. Seasonal demand and refinery issues in India contribute to the increased trend. These global and local trends have resulted in rising fuel prices, which are likely to raise airfares and make air travel more expensive for customers.
One of the most important issues confronting the aviation sector is the absence of ATF from the Goods and Services Tax (GST) regime. As a result, tax rates varied throughout states, further distorting the pricing system. Industry experts have advocated for the inclusion of ATF in GST to simplify taxes and stabilize costs.
As air travel demand rises, especially during peak seasons, local supply constraints and jet fuel taxes exacerbate the price burden. These factors, together with ongoing uncertainty in global energy markets, are expected to keep driving up jet fuel costs in the coming months.
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