ATF price hike may lead to increase in air fares: Experts

The nearly 30 per cent increase in aviation turbine fuel (ATF) over the last one year could compel domestic airlines to go for a upward fare revision to offset the increased cost of operations, according to experts.

Since the jet fuel accounts for 45 per cent of an airline's cost of operation, the carriers could think of hiking the prices by up to 15 per cent, the experts feel.

While the airlines refused to come on record on the issue, executives of some private carriers said a call on how to offset the increase in the ATF was yet to be taken even though the situation demands hiking of the fares.

The ATF price has witnessed an increase of nearly 30 per cent over the last one year and about 25 per cent in just last six months.

"There is an increase of 25 per cent in the jet fuel prices from last November till date and this definitely calls for an increase in ticket prices to meet some of the increased costs. But the question is who will bell the cat," said a private airline executive on condition of anonymity.

"We are in catch 22 situation as far as the issue of hiking fares is concerned. There is so much capacity in the market and then you have to fill the seats also," said a senior executive from another airline.

Commenting on the situation, Amber Dubey, partner and India head of aerospace and defence, KPMG, said, "We are expecting a 10-15 per cent increase in fares to partially compensate for the near-30 per cent increase in ATF prices over the last year."