IndiGo flights to become cheaper as airline removes fuel surcharge on tickets

New Delhi, Jan 4: Amid the volatility in airfares witnessed since last year, IndiGo passengers can finally look forward to some relief. The country’s largest carrier by market share and fleet size announced the withdrawal of fuel surcharges levied on domestic and international routes on Thursday following a dip in the prices of aviation turbine fuel (ATF) in recent days.

IndiGo passengers can now look forward to paying anywhere from Rs 300 to Rs 1,000 less while booking flights.

The low-cost carrier introduced the surcharge on October 3, 2023, following a significant increase in ATF or jet fuel prices in the July to September period.

“With [the] recent reduction in ATF prices, IndiGo is withdrawing the charge,” the company said in a statement.

“As ATF prices are dynamic, we will continue to adjust our fares and components thereof to respond to any change in prices or market conditions,” the statement added.

Even as passenger numbers have increased year-on-year, the high cost of ATF, especially for domestic operations, continues to cause tremendous heartburn for Indian carriers. This can vary from 25 percent of total operational costs for a single-engine aircraft to up to 45 percent for a large passenger jet.

Following personal intervention by Jyotiraditya Scindia, Union Minister of Civil Aviation, 19 states had significantly reduced the Value Added Tax (VAT) on ATF till last year. Together with Bihar (29 percent), Delhi (25 percent), Tamil Nadu (29 percent), and West Bengal (25 percent), Assam (23.65 percent) is among the five remaining states that continue to steeply tax the commodity.

No impact on Air India fares National flag carrier Air India, however, said that its fares will remain unaffected by the announcement.

“We never had this component in our fare structure,” an official at India’s second-largest airline clarified to The Assam Tribune.

Airfares have fluctuated wildly ever since low-cost carrier Go First ceased operations, citing bankruptcy in May last year.

The high fare costs are also attributed to prolonged losses suffered by Indian carriers, with full-service carriers and LCCs reporting a consolidated cumulative loss of Rs 98,252 crore between FY13 and FY23, with FY16 being the only year when the industry posted a profit of Rs 223 crore, according to data compiled by The Assam Tribune.

FY24 is, however, expected to be a good year for Indian carriers. In December, 13.8 million passengers travelled by air on domestic routes, which is the highest recorded number by far. Besides, an estimated 152 million passengers travelled by air in 2023, which is over 5 percent more than the previous high of 144.2 million registered in 2019.

Impact of Reduction on IndiGo Fares

Source: InterGlobe Aviation