Fuel surcharges levied by airlines could be rolled back following the government's intervention on aviation turbine fuel (ATF) prices, according to senior officials. The move comes after some airlines had started charging additional fuel surcharges amid rising fuel costs.
Asangba Chuba Ao, Joint Secretary, Civil Aviation, said the government's intervention is expected to ensure that airlines either recalibrate pricing or withdraw additional surcharges, preventing further burden on passengers.
He added that the move should ensure that airlines do not impose further surcharges or pass on the entire cost increase to consumers. However, airlines will continue to determine ticket pricing based on their own commercial strategies, as the aviation sector operates in a deregulated market.
“It is a competitive market. Airlines will do their due diligence before pricing. We have a robust mechanism to monitor airfares and will intervene if required,” he said, adding that without the intervention, the impact on fares could have been substantial. He also noted that the aviation industry is highly price-sensitive.
Government Calibrates ATF Price Impact
The government has allowed a limited increase of up to 25% in ATF prices to ensure that the domestic operational costs of Indian carriers remain manageable. For Indian airlines, fuel typically accounts for around 40% of total operating expenses, making ATF prices a critical cost component.
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The calibrated increase is aimed at preventing a potential industry-wide crisis while allowing airlines to maintain competitive pricing for domestic travellers. The government also said it will continue to calibrate its response depending on developments in West Asia, which have influenced global crude oil prices.
Partial Pass-Through For Domestic Airlines
Sujata Sharma, Joint Secretary (Marketing & Oil Refinery) at the Ministry of Petroleum and Natural Gas, said ATF is a deregulated product and some price hikes were necessary due to the rise in crude oil prices.
She said ATF prices have increased partially for domestic scheduled airlines, while non-scheduled and international carriers have seen the full cost increase being passed on.
According to the Petroleum Ministry, domestic scheduled airlines will see a staggered hike of Rs 21.58 per litre in ATF prices, whereas non-scheduled operators will face an increase of more than Rs 110 per litre.
Relief For Domestic Flyers
The government's intervention is expected to limit fare increases in the domestic aviation market by preventing a sharp rise in operating costs for airlines. The move comes at a time when air travel demand remains strong but highly price-sensitive, making fare stability important for both airlines and passengers.
Officials indicated that the situation will continue to be closely monitored, and further steps may be taken if required depending on fuel price movements and geopolitical developments.
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