IndiGo to levy up to Rs 400 fuel surcharge per passenger on domestic routes to offset rising oil prices; fares set to rise

New Delhi: Country's largest airline IndiGo on Tuesday announced levying fuel surcharge of up to Rs 400 per passenger on domestic routes to offset rising oil prices, a move that would increase fares.

IndiGo is the first local carrier to announce passing on the burden of spiralling jet fuel prices to the passengers.

In the wake of a sharp uptick in the price of oil and the cost of Aviation Turbine Fuel (ATF), it has been decided to re-introduce fuel surcharges effective May 30, the airline said in a release.

A sum of Rs 200 would be levied on every ticket on routes having less than 1,000-kilometre distance. The amount would be Rs 400 on routes longer than 1,000 kilometres.

"A marginal increase in airfares in the form of fuel surcharge will not have any significant adverse impact on the air-traffic demand," the release said.

Aircraft fuel expenses account for around 40 percent of the airline's operational costs, making it the single largest item of its total expenses.

"Furthermore, the depreciating Indian rupee is an additional cost burden on the Indian carriers. Given this scenario for a low-cost airline, levying a surcharge has become inevitable," the airline said.

The airline also said that it would review the surcharge in the light of oil prices going forward, and endeavours to be in a position to withdraw it once oil prices have moderated.

IndiGo's Chief Commercial Officer Sanjay Kumar said that with ATF prices in India having risen around 25 percent in the current month compared to the same period last year, 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 percent 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," he noted.

"We are hopeful that the 1.5 lakh plus passengers flying with IndiGo each day will continue giving us support," Kumar said.

The no-frills airline operates more than 1,000 flights daily. It had a fleet of 153 Airbus A320 and 6 ATR aircraft as on March 31.