Withdraw Fuel Surcharge, EICI tells domestic airlines

The apex body of firms offering express delivery services, the Express Industry Council of India (EICI) had urged the domestic airlines to withdraw Fuel Surcharge (FSC) on the back of steep dip in global crude oil rices by nearly 35% over the last one year. According to a statement issued by EICI, currently, domestic airlines in India charge between Rs. 13 to Rs.16.50 a kilogram as fuel surcharge.

Jet-Airways

The Industry has also sought the intervention of the Civil Aviation Ministry and the Director General of Civil Aviation (DGCA) for an immediate redress of the current issue and the long term demand for the trade to have a transparent and market driven mechanism for determining such pricing, noted the statement.

 

Month  Rate  FSC
     Indigo  Spicejet  Jet Airways  Air India  Kingfisher  Go Air
15-May-08     58,387.92           5.00           5.00           5.00           5.00              5.00  
16-May-09     32,199.01           3.00           5.00           6.00           3.00              2.00
16-May-10     42,556.00           5.00           5.00           7.00           3.00              5.00
16-May-11     58,794.00           7.00           7.00           9.00           4.00              7.00  
16-May-12     67,046.95           9.00         10.00         10.00           9.00            10.00  
1-May-13     62,650.00 15.00 15.00 15.00 13.00 13.00
1-May-14     71,034.00 15.00 15.00 15.00 13.00 13.00
1-Dec-14     59,943.00 16.50 15.00 16.00 14.00 13.00

Fuel surcharge on shipments is levied on a per kilogram basis and was introduced in May 2008 to mitigate volatility in fuel prices. Air Turbine Fuel (ATF) prices then was Rs. 58387/kl (referenced to Delhi Airport) and the FSC was fixed by airlines at Rs. 5/kg for cargo shipments.

Vijay Kumar, Chief Operating Officer, Express Industry Council of India said: “Currently, the ATF price is at Rs. 52423/kl which is 10% lower than the 2008 price but the FSC charged is as high as Rs. 16.50/kg for the cargo shipments. In the past as well when fuel prices fell, airlines continued to increase their FSC. Airlines need to appreciate that FSC is purely a tool to mitigate volatility and cannot be part of cargo rates. Globally, airlines benchmark FSCs to a reference like Brent crude movement or an index like USGC (published by US Department of Energy). Even in India, Blue Dart Aviation, a cargo airline references their FSC to a Brent index. This will be fair to the trade and bring down transaction costs of the Indian businesses using air cargo including the large number of micro exporters and medium and small industries, a key component of governments ‘Make in India’ campaign”.

Already, Jet Airways has slashed the surcharge by one rupee (to Rs 15) from February 1, but the reduction is negligible. The industry wants the airlines to stop charging fuel surcharge immediately, added the statement.

Express Industry Council of India is an association that aims to protect and promote the common interests of Express Industry and its members. Its activities include interacting with the Government, the Customs, other Government Agencies and other like-minded bodies. EICI operates the common user express terminals at Mumbai, Delhi and Bangalore international airports for clearance of express shipments. EICI has been successful in eradicating major bottlenecks and delays caused to Express Industry.

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