SpiceJet Ltd (SPJT.NS), an Indian budget carrier, said on Thursday that rates need to be hiked by up to 15% to offset rising fuel costs and a weak rupee, which have pushed operational expenses to unsustainable levels.
Domestic airlines have “no choice but to quickly boost rates” as a result of these 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.
SpiceJet’s stock fell as much as 5.5 percent to its lowest point since May 2020. IndiGo (INGL.NS), a larger competitor, saw its stock drop as much as 4.5 percent.
“We feel that a minimum of a 10% to 15% rise in tickets is essential to guarantee 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 expenditures denominated in or tied to the dollar.
The rupee hit a new low of 78.28 against the dollar this week, indicating an almost 5% drop this year.