Crude@135/bbl: Fly further, pay more?

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Crude@135/bbl: Fly further, pay more?

With crude prices continuing to skyrocket, airlines are planning to introduce a new slab for fuel surcharge on tickets to factor in the rising costs. Long haul flights could get costlier by the first week of June because airlines are thinking of introducing a third slab or 3-Tier policy.

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By Shivani Muthanna, CNBC-TV18

With crude prices continuing to skyrocket, airlines are planning to introduce a new slab for fuel surcharge on tickets to factor in the rising costs.

Long haul flights could get costlier by the first week of June because airlines are thinking of introducing a third slab or 3-Tier policy to levy a higher fuel surcharge for passengers flying a distance of 1,000-1,100 km and beyond or on flights over 2 hours.

Just in April this year, airlines had introduced a two-level fuel surcharge policy. So, passengers flying distances up to 750 km and those flying beyond 750 km are charged a differential fuel surcharge. While the current fuel surcharge for short haul flights is at Rs 1,950, the surcharge is at Rs 2,350 for distances beyond 750 km.

With crude crossing the USD 135 a barrel mark, sources say jet fuel prices are likely to see a hike of 7-10% by the end of this month. So, airlines are likely to introduce a 3-Tier fuel surcharge policy. Sources say the surcharge could be anywhere between Rs 2,500-2,800.

When contacted, low cost carriers like SpiceJet , Go Air and Indigo confirmed that they have discussed the introduction of a third slab for higher fuel surcharge. Jet Airways and the National Aviation Company said they will wait till the end of the month to factor in the hike in ATF prices. Kingfisher Airline officials said the matter was being discussed at the industry body level or the Federation of Indian Airlines. While jet fuel prices have spiked by 43% in the last six months, passenger growth is down from 29% in November last year to 10.7 % in March this year.