IndiGo is adding these fuel surcharges to both flights within India and to international destinations from April revisions to the charges will vary a lot depending on the specific route and how long the flight is, with the largest increases on long international journeys. The price of aviation turbine fuel (ATF) has gone up a lot, and this is why.
Announcement and regulatory context
IndiGo announced these changes shortly after the government changed the price of ATF and said airlines could pass on some of that increased cost to people flying within the country. The government is only allowing 25% of the ATF price increase to be added to domestic ticket prices, because they want to lessen the immediate effect on passengers.
IndiGo says this new fuel charge doesn’t completely make up for how much more expensive jet fuel is. If they passed on all the extra fuel cost, fares would be much, much higher, particularly for international flights where fuel prices have more than doubled in the last few weeks.
New domestic fuel surcharge bands
For people flying inside India, the new fuel surcharge will depend on distance, and will follow the government’s limit. Shorter flights will have a smaller increase, and flights of medium length will go up more.
Specifically, the new costs for domestic flights are: 0 to 500 kilometers will be 275 Rupees, 501 to 1000 kilometers will be 400 Rupees, 1001 to 1500 kilometers will be 600 Rupees, 1501 to 2000 kilometers will be 800 Rupees, and anything over 2000 kilometers will be 900 Rupees. These replace previous costs of about 150 to 700 Rupees.
IndiGo first put temporary fuel surcharges in place in mid-March, and these changes on April 2nd are because jet fuel prices have continued to go up since then. Those on medium distance flights within the country will find their price per flight increasing the most.
International route surcharges and long-haul impact
International surcharges are increasing much more and depend on both the region and the distance. Flights to Europe that are long will have the highest surcharge, while nearby international places will have more moderate, but still noticeable, increases.
The new international charges are: the Indian Subcontinent (up to 500 kilometers is 900 Rupees, over 500 kilometers is 2500 Rupees); the Gulf Cooperation Council and Middle East (up to 2000 kilometers is 3000 Rupees, over 2000 kilometers is 5000 Rupees); Southeast Asia and China (up to 2000 kilometers is 3500 Rupees, over 2000 kilometers is 5000 Rupees); Africa is 5000 Rupees; Greece and Turkey is 7500 Rupees; and the UK and Europe is 10,000 Rupees.
Because of these changes, many international tickets are now much more expensive than the earlier surcharge levels of roughly 1,500 to 6,000 Rupees on those routes just recently. Those flying a long distance internationally will be most affected by this.
Fuel market dynamics and airline economics
Airlines are very sensitive to how much the price of jet fuel goes up and down because fuel is usually 30 to 40 percent of what it costs to run the airline. Recently, problems in the world and political situations have caused big price increases in certain areas, and in some places fuel has gone up by over 100% from one month to the next.
The government’s limit on how much the domestic price can go up is to help passengers, but it means airlines are losing money on international routes. So, airlines are changing the surcharges on flights where they can set the price more freely to make up for the losses.
IndiGo says they will keep an eye on fuel prices and change the surcharges as needed. They say this is a temporary adjustment tied to the market, and not a permanent change to the price of tickets.
What travelers should know and next steps
From April 2nd onward, you should expect to pay more for tickets, particularly for international flights and medium-length flights within India. If you are planning a long international journey, remember to include the surcharge in the total cost of your trip when you buy your ticket.
If your travel plans aren’t firm, think about getting tickets you can get your money back for or change easily, and look at different airlines to find the best price for the ticket and the surcharge. Also, keep track of how much fuel costs, and what the airlines say, since surcharges can change quickly with changes in the world oil market.
As long as jet fuel prices keep changing, airlines will likely use dynamic pricing (changing prices depending on demand) and periodically change the surcharges. Both people traveling for pleasure and companies arranging travel should plan to spend more on plane tickets for the time being, but watch to see if ATF prices fall and offer some relief.
