IndiGo's Fares to Fly High

With rising oil prices in the market, hiked flight fares byone of India'sbudget airlines is inevitable. Known for it's cheap air fares, IndiGoannounces hiked prices for flight tickets and fuel surcharge, applicable on domestic trips and effective from May 30, 2018. Compelled to raise fares due to spiked charges of the Aviation Turbine Fuel (ATF) the largest airlines of the country declares a a sum of 200 to be added on routes less than 1000 kms. A sum of 400 is to be added on routes which surpass a 1000 kms distance. Additional charges like Passenger service fee, RCS (Regional Connectivity Scheme) fee and other state specific taxes are also to be included. According to the airline, the depreciating value of the Indian rupee is one of the burdens and causes of concern.

The Chief Commercial Officer of IndiGo, Mr. Sanjay Kumar stated, With ATF prices in India having risen around 25% in the current month compared to the same period last year, and at the highest in last three years, the airline is compelled to pass some of the increased cost burden to customers as a fuel surcharge. In the context of the past decade, where airfares in India have reduced by nearly 50 per cent in real terms (i.e. adjusted for inflation), we are confident that this marginal increase in the form of fuel surcharge will not have any significant adverse impact on demand."

Though passengers are sure to feel disheartened, Mr. Kumar went on to say, "We are hopeful that the 1.5 lakh plus passengers flying with IndiGo each day will continue giving us support. We assure our customers that this move of reintroduction of fuel surcharges will not much impact the low fares that are being charged, and will not change IndiGos positioning as a low cost carrier that is also synonymous with being on-time and providing courteous and hassle free service."

The hiked flight fares, according to the airline, is a compulsion so as to equalise its fuel expenses which take upto 45% (approx) of its cost of operation. However, the airline might lift the surcharge with any changes in the oil prices which could moderate its expenses.

With the current trend of the oil market, we can also expect to hear about other airlines hiking their flight fares this summer and follow in the footprints of IndiGo.