Budget airlines lose edge as fuel surcharges come into play

With domestic airlines imposing fuel surcharges following a hike in aviation turbine fuel (ATF) prices, the fare gap between Indian and foreign carriers on many international routes has narrowed significantly, making foreign full-service airlines a more attractive option for passengers. On popular West Asian routes, the difference in fares between Indian budget carriers and foreign full-service airlines has narrowed to around ₹1,000–2,000. The marginal price difference is prompting passengers to consider foreign carriers, which offer better services and additional benefits than budget airlines.

For instance, tickets from Kochi to Dubai for travel on October 12 are priced between ₹23,549 and ₹38,108 on Indian budget carriers. On the same route and date, full-service carrier Etihad Airways is offering fares from ₹28,207. A similar trend is evident on the Dubai–Kochi sector, with the fare difference remaining marginal after Indian carriers introduced fuel surcharges to offset rising operating costs due to the fuel price hike. The surcharges vary from ₹1,300 to ₹5,500 across airlines, although fares may fluctuate considerably for last-minute bookings.

According to K.V. Muraleedharan, president of the Kerala Association of Travel Agents, a round-trip ticket from Thiruvananthapuram to Dubai, departing on October 26 and returning on November 11, costs around ₹34,300 on one of the most popular budget airlines among passengers from Keralam. The same itinerary on Emirates costs around ₹35,674, with just a ₹1,000–1,500 difference in rates. Given the superior service offered by full-service airlines, the marginal price difference makes full-service airlines a more attractive option, he said.

In the latest revision, Air India and Air India Express have raised domestic fuel surcharges to ₹400–1,200 and introduced international surcharges of $55 (approximately ₹5,300) for West Asia, $135 for Europe, $210 for Australia and $215 for North America. The revised charges apply to bookings made from October 9. IndiGo, meanwhile, has raised its fuel surcharge for the third time since the West Asia conflict drove up ATF prices. The revised levy took effect for bookings made from 12.01 a.m. on October 6. The airline has imposed a surcharge of ₹1,300 on flights covering distances of more than 2,000 km.

According to a statement issued by Air India Express, the ATF prices had witnessed significant volatility in recent months, driven largely by geopolitical developments and sustained pressure on global energy markets. The latest increase in fuel prices had further pushed up operating costs, with fuel continuing to account for a substantial share of airlines’ overall expenditure, said the statement.