Airfares surge as jet fuel  prices  hit  a  peak

Airfares have soared following last week’s record hike in jet fuel prices, upsetting summer travel plans for those making last-minute bookings. Average fares on popular routes like Delhi-Mumbai, Hyderabad-Delhi and Chennai-Delhi are up 50-60% for bookings made within a fortnight before travel compared to fares a year ago.

Passengers planning to fly from Delhi to Mumbai, India’s busiest route, between 21 and 31 March must pay about ₹7,956 for a one-way ticket, shows data from online travel portal Ixigo. This is approximately 60% higher than fares a year ago.

One-way tickets to fly Hyderabad-Delhi, Chennai-Delhi and Mumbai-Bangalore routes for the same period cost an average of ₹8,253, ₹9,767 and ₹6,469, respectively, which are up 60%, 64% and 44%, respectively, than fares a year ago. Fares on Kolkata-Delhi and Delhi-Bangalore rose 43% and 36%.

“The record hike in jet fuel prices has resulted in an increase in airfares for popular routes. However, despite rising airfares, demand for both domestic and international travel for the coming summer season is still going strong,” said Aloke Bajpai, group chief executive and co-founder, Ixigo.

“Travelers should look at booking tickets 15-30 days in advance to get the best possible rates in the coming months,” Bajpai added.

Airlines were blindsided by last week’s record hike in jet fuel prices, which promises to put a severe strain on their financials. In New Delhi, jet fuel price rose by a record 18.3% to ₹1,10,666.29 per kilolitre, crossing the ₹1 lakh mark for the first time. Prices in Kolkata, Mumbai and Chennai rose to ₹1,14,979.70, ₹1,09,119.83 and ₹114,133.73 per kilolitre, respectively.

Jet fuel prices are revised every fortnight and differ across states due to varying value-added taxes imposed on them. This was the sixth such hike in 2022. Brent crude traded at $114.44 on Monday, up 79.68% on an annual basis.

Jet fuel makes up 30-40% of the cost of running an airline in India, and the price hike will crimp profit margins of airlines that have reported huge losses over the last few quarters due to the pandemic.

However, rising demand following a slump in the December-January period has been a positive takeaway for airlines though senior executives said airlines are unable to completely pass on costs to passengers, as they compete with railways and roads on many routes.

“India is a very price-sensitive market when it comes to airfares. Balancing demand and fares are a delicate act,” an airline executive said on condition of anonymity.

India recorded 362,228 domestic arrivals on 20 March, according to the latest data from the ministry of civil aviation, which is way above the sub-200,000 daily passengers recorded in late December 2021- early January 2022 but below the 400,000 daily domestic arrivals recorded during the pre-pandemic period.