Jet fuel price has been raised by 9 percent with effect from Wednesday, for the fourth straight month, posing a double whammy to passengers and air carriers.
While passengers could be hit by an increase in airfares, carriers are likely to see an erosion in their profit margins as jet fuel price accounts for about 35 percent of operating costs.
Shares of SpiceJet were trading with a marginal gain of 0.60 percent while the Jet Airway stock was down 1.72 percent at around 1 p.m. on the BSE. Interglobe Aviation, which owns budget carrier IndiGo, was the biggest loser, down 2.88 percent.
Jet fuel (aviation turbine fuel or ATF) price was increased by 9.2 percent on the last day of May.
The revised ATF price is the fourth straight monthly increase in rates in line with global prices, which will be effective from June 1, 2016 for the four Indian cities: (according to Indian Oil):
|Cities||As of June 1, 2016/Kl||As of May 1, 2016/Kl|
|Delhi||Rs. 46,729.48||Rs. 42, 784.01|
|Mumbai||Rs. 45, 700. 55||Rs. 41, 756.16|
|Chennai||Rs. 49, 404. 73||Rs. 45, 346.82|
|Kolkata||Rs. 51, 492.43||Rs. 47, 561.18|
Rates of ATF price differ across cities in India due to different local sales tax or value added tax (VAT).
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]