SpiceJet expects a 10-15% increase in airfares as a result of the ATF price hike

SpiceJet, a low-cost carrier, announced today that it will need to raise tariffs by 10-15% to stay afloat due to rising jet fuel prices.

SpiceJet Chairman and Managing Director (CMD) Ajay Singh said today that there is no other option than to raise airfares by 10-15% to cover airline operating costs.

“The sharp increase in jet fuel prices and depreciation of Rupee have left domestic airlines with little choice but to immediately raise fares. we believe that a min 10-15 per cent increase in fares is required to ensure that cost of operations is better sustained,” Singh said.

The SpiceJet chairman further stressed on the multiple ATF price hikes within a year and said, “Aviation turbine fuel prices have increased by more than 120 per cent since June 2021.”

Following Singh’s remarks, SpiceJet’s stock dropped more than 5%.

ATF prices touch new record

Today, jet fuel costs were raised by the biggest 16 percent increase in history. According to a price announcement from state-owned fuel dealers, the price of aviation turbine fuel (ATF) has been hiked by ₹19,757.13 per kilolitre, or 16.26%, to ₹1,41,232.87 per kl (141.2 per litre) in the national capital.

As a result of the increase, jet fuel costs have reached new highs across the country. Every month on the 1st and 16th, ATF prices are adjusted based on the average of benchmark worldwide rates.

The cost of running a plane will rise as the price of jet fuel rises. ATF accounts for up to 40% of an airline’s operating costs.

After ten rounds of price hikes this year, the drop on June 1 came as a welcome relief.

ATF Price in Metros

ATF is now priced at ₹1,40,092.74 per kilogramme in Mumbai, ₹1,46,322.23 in Kolkata, and ₹1,46,215.85 in Chennai. The rates vary each state, based on the amount of municipal taxation imposed.