Oil prices trigger 10% jump in airfares
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Airlines are passing on increasing fuels costs to passengers after oil prices have risen consistently since October, passing the US$100 per barrel mark. With air turbine fuel (ATF) constituting 40% of total airline costs, the rising prices and recent cess increases have taken a large chunk out of operators’ profit margins. Consequently airlines in India have instigated a 10% hike in airfares to offset rising costs and are reviewing prices on a daily basis.
Terming the present crude prices unsustainable for airlines’ survival, SpiceJet CEO Neil Raymond Mills told the Business Standard newspaper; “We have already started passing the burden of high crude prices on to the customer by raising fares and are reviewing it on a daily basis. Pricing of tickets is dynamic and changing everyday and not absolute or same across the board. At current levels of crude, airfares must be raised by INR600-700 to break even.”
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