New Delhi, March 1: Prices of flight tickets are expected to rise as oil companies hiked rates of aviation turbine fuel (ATF) or jet fuel by 10 per cent, which will come into effect from this month. The ongoing cancellation of flights by cash-strapped airlines and fresh hike jet fuel are set to increase air travel fares, aviation industry experts said. Jet fuel constitutes over 40 per cent of an airline's operating costs and the price hike will increase the financial burden on cash-strapped carriers.

"ATF prices are up again by 10% effective (March). Not good for already struggling industry! (sic)" tweeted AirAsia India COO Sanjay Kumar, an industry veteran. The price per kilolitre (kl) of jet fuel after the latest increase in Delhi, India's busiest airport, is Rs 58,060.97. In Mumbai, a kilolitre of jet fuel will cost Rs 58,017.33. Following the 10 per cent hike in jet fuel rates, airlines are likely to raise flight ticket prices.

The hike comes at a time when Jet Airways and IndiGo are cancelling flights for absolutely different reasons. According to airline officials, this has lowered the supply of seats and will allow them to increase prices of tickets to absorb increasing costs. "We need to charge fares that at least cover our costs if we have to avoid meeting the fate of Kingfisher or Jet. This is already being seen and fares are climbing up in past few months, something that may accelerate after the sharp 10% ATF price hike in March," an official told TOI.

The aviation ministry had reiterated the long-standing demand to include ATF under the Goods and Services Tax (GST) regime, which could ensure a "fair price regulation".  “We have requested the finance ministry for two things — bring ATF under GST and for input tax credit for aircraft of Indian carriers being serviced abroad,” aviation secretary R N Choubey had said. Aviation Minister Suresh Prabhu had told news agency PTI that bringing turbine fuel under GST could bring down the operational cost by 35-40 per cent approximately.

(The above story first appeared on LatestLY on Mar 01, 2019 11:13 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).