Domestic airfares likely to go up, thanks to costlier jet fuel

With costlier crude oil, local travelers will now have to pay more to fly within the country as expensive jet fuel will force the airlines to raise domestic fares.

The hike in consumer fares in January reflects the persistent rise in aviation-fuel prices, and they increased 8% on-month in November at the New Delhi airport, the country's busiest. However, after a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.

This has further led to additional fuel costs passed on to consumers. Many of the costumers switched to airlines after the gap between air and upper-class train fares narrowed in 2016.

According to a senior executive at Jet Airways, the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.

"We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he told ET.

Jet-fuel is the biggest cost item for Indian carriers.

Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country's biggest online travel portal, average fares dropped in November and December but rose in January.

"An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee's depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days. At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% yearon-year drop in fares on an average for travel bookings made over 14 days in advance,” Samyukth Sridharan, president and chief operating officer of Cleartrip.