Passengers may end up paying 13% more for air fares in 2018 Post GST
Flight tickets are likely to become more expensive this year owing to increase in fuel prices and GST.
Flight tickets are likely to become more expensive this year owing to increase in fuel prices and GST. Passengers might have to shell out nearly 13 per cent more than they are currently paying. A report in Economic Times mentioned that after implementation of GST, cost of operations has spiked by 27 per cent.
SpiceJet Chairman Ajay Singh told Economic Times that there is a high degree of pent up demand and that they also have to keep in mind airport costs. He added that jet fuel which is not under the purview of GST must be included under GST, so that airlines can claim input tax credit.
An airline executive quoted by in news report said that this spike in prices will be felt mostly by those who buy tickets last-minute, while fares would remain cheap if tickets are bought earlier. The executive also mentioned that the jet fuel prices had shot up by 16 per cent and other costs had shot up by 7 per cent.
Indian Oil Aviation Service, which supplies jet fuel to domestic and international carriers, is currently selling ATF to domestic carriers for Rs 57,349 per Kl. In July 2017, the price was Rs 47,013 per Kl. Similarly, international airlines can buy ATF for $634 per Kl as compared to $517 per Kl in July last year.
The move could impact the India’s airline industry as the boom in Indian aviation is riding on the back of the economy class and low fare. Budget carrier IndiGo has spent 35 per cent of its operating expenses in three months on fuel, the report said.
The report also mentions that new levies under GST would add Rs 4,750 crore per year on airlines, which means it could potentially wipe off airlines’ profits.