Wednesday, June 29, 2022
HomeTravelAirlines demand immediate relief measures, reiterates inclusion of ATF under GST, ET...

Airlines demand immediate relief measures, reiterates inclusion of ATF under GST, ET TravelWorld News, ET TravelWorld

Airfare hike: Airlines demand immediate relief measures, reiterates inclusion of ATF under GST
Reeling under the impact of rising ATF prices coupled with the weakening of the Indian rupee against the US dollar, the Indian aviation sector is demanding immediate relief measures from the government. With the peak summer travel season and heavy demand, airfares across the sectors have already increased and the industry thinks the trend will continue unless the situation gets stabalised.

Aviation fuel in India attracts the highest levels of taxes in the world. Airlines have been requesting the government to bring the fuel under the new tax regime of GST. Indian carriers that were beginning to recover from the jolts of the Covid-19 pandemic have now been hit by a constant hike in jet fuel prices since the beginning of 2022. The airlines are saying that the current situation has left them with no other option than to increase the airfare, which has also impacted the demand as travellers feel the heat of shelling out 15-20 per cent more money for air tickets.

“Aviation turbine fuel prices have increased by more than 120 per cent since June 2021. This massive increase is not sustainable and governments, central and state, need to take urgent action to reduce taxes on ATF that are amongst the highest in the world. We have in the last few months tried to absorb as much burden of this fuel price rise, which constitutes more than 50 per cent of our operational cost, as we could. The weakening of the Indian rupee against the US dollar further significantly impacts airlines as our substantial cost is either dollar-denominated or pegged to the dollar. The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares and we believe that a minimum 10-15 per cent increase in fares is required to ensure that cost of operations are better sustained,” commented Ajay Singh, Chairman and Managing Director, SpiceJet.

Whereas online travel agencies and tour operators also feel that government should take immediate measures. “The rise in ATF prices brings in one of the biggest challenges for the aviation sector, as it is one of the major factors impacting the operational costs for airlines. There is a pent-up demand for summer vacations domestically and to international locations and with ATF prices going up, this has a direct impact on the airfares across markets. We at have witnessed a 30-40 per cent rise in airfares in the last two months with demand subdued for the month of June. On the International travel front, since airlines are not operating at full capacity on all routes, the fares have continued to rise. It is also important to understand that apart from ATF prices, airfares are being impacted by the depreciation of the rupee, moderate market recovery, and airlines not operating to the fullest of their capacity,” stated Sabina Chopra, Co-Founder & COO, Corporate Travel & Head Industry Relations, talking on the matter.

A spokesperson at the largest budget carrier in the country, IndiGo mentioned that the situation is unfavorably impacting the aviation sector as it constitutes almost half of any airline’s operational costs. “The latest hike in the ATF prices last week is the tenth straight increase since the start of 2022. To facilitate recovery of the aviation sector and to make flying viable for everyone, we would request the government to at least bring ATF under GST so that the benefit of the input tax credit can be availed,” said the airline’s spokesperson.

While the spokesperson at Go FIRST, who is operating on the model of an ultra-low-cost carrier mentioned that the situation is impacting its cost structure and providing affordable airfares is getting difficult. “The fuel cost has gone up close to 100 per cent over the last five months which is a point of concern for the airline companies. It’s quite surprising that despite the international crude prices being stable between USD 100 and 120 over the last 3 months, the ATF in India has been going up like crazy. The collaborative impact on international crude has only been 40 per cent in the last five months, however, in India, the ATF has seen almost a 100 per cent hike during the same time. Being a ULCC we have been able to keep our cost structure affordable all this while. Fortunately, the consumer demand has been consistent and quite encouraging despite the rising prices of tickets,” the spokesperson mentioned.

Source link



Please enter your comment!
Please enter your name here


Most Popular

Recent Comments