x Abu Dhabi, UAEFriday 28 July 2017

Jet Airways and Air India raise prices as jet fuel costs soar

The price of air travel in India is on the rise. Jet Airways and Air India are increasing fuel surcharges on flights from this week because of a rise in the cost of jet fuel.

The price of air travel in India is on the rise.

Jet Airways and Air India are increasing fuel surcharges on flights from this week because of a rise in the cost of jet fuel.

Charges on flights of less than 1,000km will increase by 150 rupees (Dh9.85), while flights over a longer distance will incur an extra charge of 250 rupees, Jet Airways said. There will be a one-way fuel surcharge of US$15 (Dh55.09) on most international flights, the airline said.

The global airline industry's fuel bill is expected to reach $207 billion this year, according to the International Air Transport Association. This is an increase of $31bn over last year and is almost five times the fuel bill of airlines in 2003. Higher oil prices mean fuel now accounts for almost a third of airlines' operating expenses compared with 14 per cent in 2003.

Boeing this week forecast India would have the highest passenger growth in the world over the next 20 years.

Meanwhile, Air India is grappling with other issues. Its failure to gain membership in the Star Alliance network could jeopardise a 300bn rupee government bailout package planned for the airline.

In April it was announced funds would be injected into the airline until 2020 to help the state-owned carrier become profitable.

"Joining the Star Alliance would have allowed Air India to codeshare and expand its operations, making it less reliant on the domestic Indian populace," said Saj Ahmad, the chief analyst at StrategicAero Research. "Given the competitive market today, Air India is on borrowed time in its current form. And ultimately, it's the government has to shoulder responsibility for the quagmire it finds itself and the airline in."

Issues of red tape and poor governance were weighing on the airline's performance, he said.

Securing membership to the international network Star Alliance was a pillar in the turnaround plan and road map approved by the government, the Indian business publication Mint reported this week.

Last month it emerged Air India's bid for entry to the Star Alliance group had been rejected after the existing 27 members failed to reach a unanimous agreement.

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