Price hikes on the back of rising fuel costs have led to a dip in customer demand. Expect another round of consolidation in the beleaguered Indian aviation sector.
This is not a good time to be running an airline in India. Reeling as the sector was under a declining trend of lower loads and cut throat competition, a drastic hike in aviation turbine fuel (ATF) was the last thing it needed.
The cost of ATF or refined kerosene has more than tripled in the last four years and risen by over 65 per cent in the last five months from about Rs 40 per litre to about Rs 68 per litre.
While the ATF costs about Rs 41 per litre in the regional markets of Dubai and Singapore and Rs 37 per litre globally, why does it cost nearly 65 per cent more in India?
Margins, taxes and more
The inflated prices that airlines in India have to pay for is largely a function of the duties, margins and local levies, which are split between oil marketing companies (OMCs), states and the Centre.
Text: Ram Prasad Sahu
Image: A security official stands guard next to a hoarding of an Indian airline company outside Chattrapati Shivaji International Airport in Mumbai | Photograph: Indranil Mukherjee/AFP/Getty Images
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