IndiGo announced a fuel surcharge of up to Rs 400 a passenger on local routes to contradict the recent increase in oil prices, which led to an increase in tariffs.
The surcharge will be applied in domestic trips and will work from midnight on May 29. The amount of Rs 200 will be added on routes of less than 1,000 km, while the amount of Rs 400 on routes of more than 1,000 km, the airline said.
“The maximum increase in the cost of airline tickets in the form of a fuel surcharge won’t have a significant negative impact on the demand for air transport,” the statement said.
The cost of aviation fuel is responsible for about 40% of the airline’s operating costs, making it the largest aspect of its total costs.
“In addition, the drop of the Indian rupee is an extra cost for Indian companies; taking into account this scenario, the charging of the surcharge has turn out to be unavoidable for a low-priced airline,” he said.
The airline also said it will review the hike in light of rising oil prices and try to keep it after oil prices relax.
In recent months, crude oil prices have experienced exceptional growth, reaching a four-year rise of about $80 per barrel.
Several reasons for the increase in world crude oil prices include an increased appetite for oil in recent months, the influence of the US decision to withdraw nuclear applications, and sanctions on Iran which leads to an issue of demand fulfillment due to the shortage in production.
In the context of the last decade, when the cost of airline tickets in India decreased by almost 50% in real terms, the company is optimistic that a marginal increase in bonus forms for the fuel will not have any significant negative impact on the demand.