Summary
- IndiGo raises ticket prices attributable to surging fuel costs, implementing a fuel charge that varies based on flight distance.
- Aviation fuel prices have increased by 6% up to now month, driven by restricted fuel exports and better overall costs.
- Airlines worldwide, including United Airlines, Southwest Airlines, Alaska Airlines, and Qantas, are grappling with rising fuel prices, affecting their bottom line.
On October 5, IndiGo announced it will be increasing all ticket fares for flights. This increased ticket fare is attributable to a fuel charge addition. The charge, which is implemented on each domestic and international flights, will go into effect on October 6.
Latest pricing guidelines
IndiGo said in an announcement that the increased fuel charge is attributable to surging Aviation Turbine Fuel (ATF) prices. The budget airline also said that aviation fuel has been consistently increasing in cost every month over the past three months. This led to increasing ticket fares via the fuel charge to negate the increasing fuel pricing surge. IndiGo said in an announcement,
“ATF accounts for a considerable portion of an airline’s operating expenses, necessitating fare adjustment to handle such a value surge.”
The fuel tax will change depending on the space of the flight. The pricing structure is shown below:
- 0–500 kilometers (0-310 miles) has a fuel charge of INR 300 ($3.60)
- 501–1000 kilometers (310–621 miles) has a fuel charge of INR 400 ($4.80)
- 1001–1500 kilometers (621–932 miles) has a fuel charge of INR 550 ($6.60)
- 1501–2500 kilometers (932-1553 miles) has a fuel charge of INR 650 ($7.80)
- 2501–3500 kilometers (1553–2175 miles) has a fuel charge of INR 800 ($9.60)
- 3501 kilometers (2175 miles) and above has a fuel charge of INR 1000 ($12.00)
Fuel prices surging
Aviation fuel has significantly increased in cost over the past several months. In keeping with information from the International Air Transport Association (IATA), fuel costs have increased by 6% over the past month. The typical cost per barrel of fuel on September 22 was $131. This is sort of a $10 increase in price per barrel from the previous month.
Fuel prices have been steadily increasing since April earlier this 12 months. Nonetheless, current fuel prices are about 3% lower than they were presently last 12 months.
Airlines all around the world have been affected by the pricing increases. Three airlines in america, United Airlines, Southwest Airlines, and Alaska Airlines, have stated that increased prices will affect their bottom line. An announcement from Alaska Airlines said,
“Over the past several weeks, fuel prices have increased considerably, driving a downward revision to our adjusted pre-tax margin expectations for the quarter.”
Photo: Ryan Fletcher I Shutterstock
In Australia, Qantas has revealed that increasing fuel costs may drive its standard airfare upwards. The airline revealed that fuel costs for the primary six months of 2023 were 30% higher than the previous 12 months. The airline also expects its yearly fuel costs to achieve AU$2.8 billion ($1.8 billion). Qantas said in an announcement,
“The group will proceed to soak up these higher costs but will monitor fuel prices within the weeks ahead and, if current levels are sustained, will look to regulate its settings.”
Variables for rising fuel costs
There are multiple reasons which are affecting the present cost of aviation fuel internationally. Each Russia and Saudi Arabia have voluntarily restricted their fuel exports. In September, Russia’s fuel exports hit an eleven-month low. These directly result in fuel cost increases as the availability of fuel is lower.