Airline flags fare hikes of up to 15%

• Shares in SpiceJet tumbled as much as 5.5% to their lowest level since May 2020.
• Managing Director Ajay Singh said rising fuel costs and a weak rupee have pushed operational costs to unsustainable levels.
• The rupee hit a new low against the dollar this week, indicating an almost 5% drop this year

SpiceJet, an Indian low-cost carrier, said on Thursday that tickets may need to be raised by as much as 15% to offset rising fuel costs and a weak rupee, which have pushed up operational costs to unsustainable levels.

Domestic airlines have “no choice but to quickly boost fares” as a result of both circumstances, according to Managing Director Ajay Singh.

He pointed out that the price of aircraft turbine fuel has risen by more than 120 percent since June 2021, and he urged on the federal and state governments to reduce taxes.
Shares in SpiceJet tumbled as much as 5.5% to their lowest level since May 2020. Shares in larger rival IndiGo fell as much as 4.5%.

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“We believe that a minimum of a 10% to 15% rise in tickets is essential to ensure that cost of operations is better sustained,” he added, noting that fuel accounts for more than half of an airline’s operating costs.

According to Singh, the rupee’s depreciation versus the dollar is “seriously” harming airlines with major costs denominated in or pegged to the dollar.

The rupee hit a new low of 78.28 against the dollar this week, indicating an almost 5% drop this year.