Aviation fuel price hike likely to hurt aviation, travel reboundThe fuel surcharge that is added to the cost of a plane ticket has been raised from Rs45 to Rs440, depending on the distance.
Domestic airlines have jacked up fuel surcharges in line with increased aviation fuel prices.
The Airline Operators Association of Nepal on Wednesday gave the go-ahead to its members to hike ticket prices to reflect costlier aviation fuel.
The higher airfares are likely to put a dent in travellers’ wallets immediately as the price rise has come during the festival season which is traditionally accompanied by a travel rush.
Airline officials said passengers have already been complaining about expensive airfares. Carriers charge the full fare during the festival season as demand usually goes up significantly. Travel demand drops following the end of the festive season.
According to airline officials, higher fuel costs could hurt the sustainability of carriers struggling to recover from the financial ruin caused by Covid-19.
On October 29, state-owned monopoly Nepal Oil Corporation jacked up aviation fuel prices sold to domestic carriers by Rs10 per litre to a four-year high of Rs96 per litre. The latest increase is the ninth since March 1.
In the last eight months, the price of aviation fuel sold to domestic carriers has increased by Rs24 per litre.
In response to the fuel price hike, airlines decided to increase the fuel surcharge.
The government controls the price of a plane ticket and airlines are not allowed to increase the airfare. A committee under the Civil Aviation Authority of Nepal revises the surcharge if fuel prices fluctuate by at least Rs4 per litre.
In the latest increase, the fuel surcharge that is added to the cost of a plane ticket has been raised from Rs45 to Rs440, depending on the distance.
“It’s a big hike. The sharp increase in the price of fuel is set to impact the rebound of the aviation and travel industries as it will result in fares going up,” said Dipendra Karna, communication manager at Buddha Air.
“It will also impact airlines hit by the Covid-19 pandemic and undermine their efforts to recover the cost of operations,” he said. “It is going to be a difficult time ahead for us.”
Airlines say fuel prices account for up to 40 percent of the total cost of operations in Nepal, one of the highest in the world.
According to a Civil Aviation Authority of Nepal report, Nepal’s aviation industry suffered losses amounting to Rs37 billion, from the time the first lockdown was enforced on March 24, 2020 to June 1, 2021.
Out of total estimated losses, domestic airlines suffered losses amounting to Rs25 billion followed by the Civil Aviation Authority of Nepal with Rs12 billion.
Following the revision, the normal fare on a flight from Kathmandu to Dhangadhi, the longest domestic route, will cost Rs12,570, including Rs4,240 fuel surcharge and Rs200 airport tax.
A ticket on the shortest flight, Kathmandu-Simara, has gone up to Rs3,100, including Rs865 fuel surcharge and Rs200 airport tax.
Similarly, ticket prices on the Kathmandu-Bhadrapur and Kathmandu-Biratnagar sectors have gone up to Rs9,830 and Rs7,645 respectively. The fuel surcharges on the two flights have swelled to Rs2,880 and Rs2,305 respectively.
The fuel surcharge on the Kathmandu-Pokhara flight has increased to Rs1,520 and the revised ticket price on this sector is Rs5,190, including Rs200 airport tax.
Fuel surcharges on the Kathmandu-Nepalgunj and Kathmandu-Bhairahawa sectors have increased to Rs3,130 and Rs1,975 respectively. The revised airfares on these sectors are Rs10,615 and Rs6,440 respectively.
Before the coronavirus, domestic aviation was on a high as Nepalis, lured by cheap tickets, took to the skies like never before and filled planes to capacity.
All that changed after the pandemic grounded flyers and airlines. In less than a year, the virus had wiped out more than half of the domestic passenger traffic.
Tribhuvan International Airport statistics show that domestic carriers lost 1.73 million passengers. According to the data, domestic airlines carried 1.45 million passengers in 2020, a 54.28 percent plunge from the 2019 figure.
Domestic passenger traffic through Kathmandu’s Tribhuvan International Airport in 2020 fell to an 11-year low. But airline officials said that domestic carriers had recovered to pre-Covid passenger numbers since July 2021.