Money

Domestic airlines hike fuel surcharge steeply

- Sangam Prasain, Kathmandu

Nov 10, 2015-

Domestic airlines have jacked up the fuel surcharge steeply threatening to put air travel out of reach of a vast section of the population.

Following a hike in the price of aviation fuel by Nepal Oil Corporation (NOC) on Monday, carriers raised the fuel surcharge by Rs1,725 to Rs4,455.

The state-owned oil monopoly doubled the price of aviation fuel sold to domestic carriers to Rs232.78 per litre from Rs118 per litre as it has to be flown in due to an unofficial trade blockade by India which has virtually cut off shipments by surface transport.

Airlines did not wait long to jack up the fuel surcharge. Fuel accounts for 30-35 percent of the total operating costs, and it becomes the single biggest factor in losses if the fuel surcharge is not raised, they said.

As per the revised airfare, a ticket on a flight from Kathmandu to Dhangadhi will cost Rs15,595 one way, which is almost equal to the fare for New Delhi.

“The only factor contributing to the rising price of airline tickets is fuel,” said Rupesh Joshi, senior marketing executive of Buddha Air.

“It’s a massive hike. But we are optimistic that it will be temporary,” Joshi said, adding that once the fuel crisis eases, airfares will be reduced to the old levels. “However, for now, we are not sure whether travellers will want to fly given the airfare structure.”

As the fuel crisis has worsened, airlines have cut down their regular operation by more than 50 percent since Sunday. Meanwhile, mountain flights have been suspended temporarily.

“At a time when the domestic airline industry is already reeling under the double whammy of a lowered economic output and sky-rocketing fuel prices, passengers and airlines are going to get hit by a massive fuel surcharge hike,” said Bhim Raj Rai, media manager of Yeti Airlines.

“On the one hand, airlines have been forced to cancel more than 50 percent of their flights due to the fuel crisis, while on the other hand the increased airfare will force travellers to think twice about flying,” he said.  

Gopal Bahadur Khadka, managing director of NOC, said that they have not been able to import aviation fuel that has resulted airlines to face difficulties.

“Although, Nepal Airlines has agreed to airlift fuel, the quantity it has been bringing in is not sufficient to fulfil the requirement of domestic airlines,” Khadka said. NOC attributed the unexpected price hike to air freight costs.  

However, Khadka said that the aviation fuel crisis would ease soon as Petromax Nepal would be airlifting fuel by this week. NOC has awarded a fuel import contract to the company that has been permitted to airlift fuel from Kolkata or Dhaka using Jordan Aviation’s Boeing 767.

Petromax has signed an agreement with the state-owned oil monopoly to supply 400 kilolitres of aviation fuel daily at

Rs192 per litre.

Nepal’s domestic air passenger movement continued to shrink for three straight years, dropping 6 percent in 2014, mainly due to high fares.

Airlines saw a robust growth of 13 percent in 2008 which jumped to 33 percent in 2009 as they cut fares amid low fuel costs and stiff competition. Although passenger movement increased 12.83 percent in 2010, the growth rate started dropping in 2011 and has shown a negative growth since 2012.

Published: 10-11-2015 08:54

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