GURUGRAM- On Thursday (January 4, 2024), IndiGo Airlines (6E) announced the cessation of fuel charge collection on tickets, nearly three months after implementing the levy in response to a surge in jet fuel prices.
Introduced by the airline in early October 2023, the fuel charge has been eliminated as of Jan 4, 2024. IndiGo stated that the withdrawal is a result of the recent reduction in Aviation Turbine Fuel (ATF) prices.
IndiGo Removes Fuel Surcharge
“As ATF prices are dynamic, we will continue to adjust our fares and components thereof to respond to any change in prices or market conditions,” mentioned IndiGo in a statement.
It’s worth noting that fuel costs constitute a significant portion of an airline’s operational expenses.
In October, the airline implemented fuel charges ranging from Rs 300 to Rs 1000 on both its domestic and international routes, attributing the decision to the escalating prices of Aviation Turbine Fuel (ATF).
Reduction in ATF Prices
On January 1, the central government, for the third consecutive occasion, reduced Aviation Turbine Fuel (ATF) prices. This time, the reduction amounted to approximately 4%, bringing the cost to Rs 101,993.17 per kiloliter in New Delhi, according to notifications from state-owned fuel retailers.
In November and December, ATF prices witnessed cuts of 6% and 4.6%, respectively. The cumulative impact of these three reductions has nullified nearly 45% of the Rs 29,391.08 per kiloliter increase implemented in four monthly tranches beginning July 1.
The reduction in ATF prices is advantageous for airlines, given that jet fuel constitutes approximately 40% of their operational expenses.
State-owned entities, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), routinely revise cooking gas and ATF prices on the 1st day of each month.
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