Air India hikes fares by 10 percent, others to follow (Lead)

July 31st, 2008 - 11:59 pm ICT by IANS  

New Delhi, July 31 (IANS) Soon after state-run oil companies Thursday hiked aviation turbine fuel (ATF) prices by 2.8 percent, Air India increased air fares by at least 10 percent effective from Friday. “ATF prices depend on demand and supply and the dynamics of the market. The market is extremely volatile currently. Air fares have to be hiked to meet the operational costs,” said an Air India spokesperson.

A SpiceJet spokesman said: “The price hike is marginal. We would evaluate the impact and decide on changes in fare or fuel surcharges over the next few days.”

Jet Airways also hinted that the fares would go up soon. A company spokesman said the carrier would take a decision Friday.

Industry sources said other airlines will also hike fares in a day or two.

“Once Air India has increased its fares, others will follow suit,” said an airline official.

Aviation fuel in New Delhi will now be costlier by Rs.1,931.07 per kilolitre from midnight.

This is the second state increase in ATF prices, which are revised once a month based on monthly average of global oil prices, said an Indian Oil official.

The benchmark Brent crude price has been falling steadily since July 11, when it peaked at $147.02 per barrel; it was going for $125.93 Thursday, around the same price that prevailed mid-May, much before the first ATF price in India June 9.

The fuel would now be priced at Rs.71,028.26 per kilolitre from Friday against Rs.69,097.19 per kilolitre.

Similarly, in Mumbai aviation fuel prices have been hiked to Rs.73,673.56 as against Rs.71,630.53 per kilolitre, said an Indian Oil official.

The fuel will cost $41.68 per kilolitre more for international airlines refuelling at Delhi. The new rates for ATF for foreign lines, which do not pay local sales tax, will be $1,290.58 per kilolitre.

Reacting to the aviation fuel hike, the Air India spokesperson said it would first look at the impact of the aviation fuel hike. “We will be the last to increase the fares,” he said.

“We cannot decide on fare hike now. We will assess the market situation first,” said a Jet Airways spokesperson.

The state-owned Air India and budget airline SpiceJet hiked fares June 19 by at least Rs.300 following the first upward revision of turbine fuel (ATF).

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