Jet fuel prices have shot up again in Bangladesh to reach Tk106 after Padma Oil Company, a subsidiary of Bangladesh Petroleum Corporation (BPC), raised it by Tk6 a litre.
Air travel will inevitably cost more as a consequence as fuel constitutes around 40% of the total running cost of an airline.
Industry insiders warned that the decision would shake the domestic aviation industry unless the government took initiatives to reduce jet fuel prices or have alternative plans in place.
Prices of jet fuel have so far been hiked 15 times in the past 18 months.
Jet fuel prices are reviewed every month, based on the average price of the international benchmark, especially the Indian (Kolkata) jet fuel market, said officials at the BPC.
The new price list of jet fuel was updated on May 14, which has been in effect since May 15.
According to BPC, jet fuel costs Tk106 per litre for domestic flights and the international price of jet fuel stands at $1.09 per litre. It was $1.02 per litre in April.
In the meantime, CNN-News18 reported that the Indian Oil Corporation (IOC) had announced a hike in jet fuel prices by 5%, taking it to Rs 1.23 lakh per kilolitre in Delhi.
Leaders of Recruiting Agency Oikya Parishad and Bangladesh Association of International Recruiting Agents (BAIRA) complained that BPC had been frequently raising fuel prices solely by citing the ongoing Ukraine-Russia war.
Jet fuel prices ended at 5.6% down at $166.4/bbl (US dollars per barrel) last week, according to the International Air Transport Association (IATA).
Will air ticket prices shoot up as well?
Officials of Biman Bangladesh Airlines, US-Bangla and NOVOAIR said that jet fuel prices had risen by more than 130% in the last year and a half.
They said it was a big blow to the Bangladesh aviation industry, and passengers would have to pay the ultimate price.
The contribution of the aviation and tourism sector is about 3% of the total GDP of the country, which could increase under proper monitoring, they said.
Kamrul Islam, general manager of public relations at US-Bangla Airlines, said: “If the government fails to control jet fuel prices, domestic airlines will suffer financially and lose their position in the aviation market.”
Lal Hossain, BPC secretary, said: “The government offers no subsidies for jet fuel. The committee responsible for fuel prices has increased the price of jet fuel, citing high import costs. In comparison to the Kolkata market, the jet fuel price here is much lower.”
Reflecting on the situation, aviation expert ATM Nazrul Islam told Dhaka Tribune that unless the war in Ukraine ended, the price of jet fuel would not come down.
The situation has created a gloomy sky for two upcoming domestic airline companies — Fly Dhaka and Air Astra.
Kazi Wahidul Alam, another aviation specialist and a former board member of Bangladesh Biman, believes that the situation can be controlled if the government reduces 50% VAT (Value Added Tax) on jet fuel prices.
The government is already getting fare taxes from air passengers, he added.
The Aviation Operators Association of Bangladesh said the minimum fare on domestic routes was Tk3,200 in January last year, but it rose from Tk3,500 to Tk4,500 due to the continuous increase in jet fuel prices.
It estimates that airfares could increase by at least Tk500 to Tk600 or more per passenger on domestic routes due to the latest price hike.
