By Aditi Shah
NEW DELHI (Reuters) - Indian budget carrier SpiceJet Ltd said on Thursday fares need to be raised as much as 15% to counter high fuel costs and a weak rupee which have lifted operating costs to unsustainable levels.
Both factors have left domestic airlines with "little choice but to immediately raise fares", Managing Director Ajay Singh said in a statement.
He noted aviation turbine fuel prices have increased by more than 120% since June 2021 and called on the federal and state governments to cut taxes.
Shares in SpiceJet tumbled as much as 5.5% to their lowest level since May 2020. Shares in larger rival IndiGo fell as much as 4.5%.
"We believe that a minimum 10%-15% increase in fares is required to ensure that cost of operations are better sustained," he said, adding that fuel makes up more than 50% of an airline's operational cost.
Singh said the Indian currency's fall against the dollar is also "significantly" affecting airlines that have substantial costs that are denominated in or pegged to the U.S. currency.
The rupee fell this week to a record low 78.28 to the dollar, marking a decline of nearly 5% this year.
(Reporting by Aditi Shah; Editing by William Mallard and Edwina Gibbs)