Devaluation of rupee has not significantly impacted the airfares, says civil aviation ministry
New Delhi, Oct 4: With the airlines' struggling to keep up with sharp increase in the aviation turbine fuel (ATF) price, the Civil Aviation Ministry has said that "devaluation of rupee has not significantly impacted the airfares".
The airline companies are seeing a sharp dip in profits due to depreciating rupee, rising costs and hike in aviation fuel prices. The increase in aviation fuel price will soon be passed on to the consumers, which will make air travel costlier.
"So far, we have seen that impact of the increase in fuel prices and devaluation of rupee has not significantly impacted the airfares," said RN Choubey, Secretary Civil Aviation, told news agency ANI.
Leading oil refining and marketing company Indian Oil Corporation (IOC) announced that jet fuel or Aviation Turbine Fuel (ATF) prices would be up increased by Rs 5,016 per kilo litre (KL), or 7.25 per cent, from October 1.
Fuel price hikes impact Indian aviation companies more than the foreign ones operating in the country. Typically, fuel accounts for 24.2% of an airline company's costs. For Indian companies though, it accounts for 34% due to a lack of competition among those supplying fuel at Indian airports and hence there is little commercial incentive to keep fuel prices flexible.