India's low-cost carrier IndiGo on Wednesday announced fuel surcharges of up to Rs 400 to offset hike in Aviation Turbine Fuel (ATF) in the country with effect from midnight of May 29.
The airline will charge a sum of Rs 200 on routes less than 1000 km distance, and Rs 400 on routes longer than 1000 km distance on all domestic flights.
"Aircraft fuel expenses represent the single largest item of IndiGo's total expenses, accounting for around 40 percent of the airline's cost of operation. Furthermore, the depreciating Indian Rupee is an additional cost burden on the Indian carriers. Given this scenario for a low-cost airline, levying a surcharge has become inevitable," the airline said in a statement.
Sanjay Kumar, Chief Commercial Officer of IndiGo said with 25 percent rise in ATF prices in the current month, the airline is compelled to pass some of the increased cost burden to customers as a fuel surcharge.
"In the context of the past decade, where airfares in India have reduced by nearly 50 percent in real terms (i.e. adjusted for inflation), we are confident that this marginal increase in the form of fuel surcharge will not have any significant adverse impact on demand," Kumar said.
Kumar further assured that the move will not change IndiGo's positioning as a low-cost carrier.
The jet fuel accounts for 45 percent of an airline's cost of operation, which has increased nearly 30 percent over the last one year.
The unprecedented increase in ATF prices has triggered a call for bringing it under the purview of the Goods and Services Tax (GST). It is to be noted that all petroleum products are presently outside the territory of the GST.