Kathmandu, November 2:

Domestic airfare will be dearer from next week thanks to a hike in air turbine fuel (ATF) prices for the domestic sector by Rs 13 per litre.

Domestic airliners are busy calculating ways to adjust the price rise as fuel surcharge on tickets. The price of ATF for domestic flights has been increased by 23.63 per cent to Rs 68, up from Rs 55 by Nepal Oil Corporation (NOC).

Bikash Rana, president of Airlines Operators Association of Nepal (AOAN), said that the fuel surcharge would come into effect from Sunday. Rana however disclosed, “The increment would be in proportion to the rise in fuel prices.”

This means that the fuel surcharge on tickets is likely to be in the range of 20 to 24 per cent, depending upon routes and flight durations. According to Rana, the Civil Aviation Authority and the ministry of tourism, culture and civil aviation have already been informed regarding the issue. “We will levy fuel surcharge as per our understanding reached earlier between the civil aviation authority and air operators, which allows us to raise it in proportion to hike in fuel prices,” Rana told this daily.

Mukunda Dhungel, spokesperson at NOC, said the monthly losses of the state-run petroleum supplier would come down to around Rs 290 million following this hike in the price of ATF.

NOC will earn a profit of eight rupees per litre of aviation fuel under the new pricing. “This will be a bit of a relief to NOC, although ATF prices remain cheaper compared to Kolkata prices,” he said. Some two weeks ago, NOC had increased the prices of ATF for international flights to Rs 69.88 per litre up from Rs 49.50 per litre.

Fuel supply to international flights enjoys bonded supply facility, while ATF supply to domestic flights are taxed. As a result, Nepal Airlines Corporation has already put a fuel surcharge of additional $4 on each ticket in flights bound for India and $10 on other international flights.

Nepal imports about 6,500 kilolitre of ATF every month, of which 60 per cent is consumed by international operators. The rest is used in the domestic circuit. According to NOC sources, the decision was taken after the government was convinced that air passengers could not be tagged as a group entitled to state subsidy.