Airlines must lower fares
Apropos of the report “Cheaper fuel, higher capacity take airfares to lower altitude” (FE, April 1), it goes without saying that these airlines have not truly been passing on the expected benefits of the steep drop in the price of aviation turbine fuel (ATF) to their passengers. It is important to note that though ATF prices, which constitute 40-50% of total operating costs of an airline, have seen a 57% decline since July 2014, air-fares have fallen only very marginally. Incidentally, it may also be mentioned that even this drop is confined only to the airlines’ base fare, which always attract a host of taxes and various fixed charges which nearly double the payable fare. No wonder then airlines have been making huge operational profits for the last two years. Thanks to the benevolence of the government, which has been very kind to them by consistently reducing the price of ATF without ensuring that they invariably pass on some reasonable benefits thereof to their customers. Interestingly, these customer-savvy airlines never fail to make ‘lucrative’ offers to their prospective customers by christening marginal discounts as ‘summer-holiday special’ or ‘festival-special’ from time to time. Moreover, it is also usually the case that the fares quoted on the airline web-site for tickets are always jacked up whenever the actual booking is done. This unfair practice of airlines must stop forthwith.
Kumar Gupt, Panchkula (Haryana)
Tata to the UK
Commodities have disproportionate hold over global economies and when sizeable production of basic ones rest with one nation, it skews the markets. Steel and oil share that destabilising potential. China produces 50% of global steel and when demand was high, even an undervalued renminbi could be shrugged off by other nations. A plunge in global growth had China slash its steel production by 10% (equal to India’s total cap) along with brazen export dumping. That has put every other steel producer, like the Tatas in UK, in dire straits. Saudi Arabia has 25% of global crude reserves. Suiting its geo-political needs, it raised prices to $145 in 2007, and brought it down to a low sub-$30 today. Over $150 billion of energy-related projects in FY16 alone are in stasis as a result. In 1998, as crude declined to $10 from $32 in 1981, other oil-producing nations brought an anti-dumping petition against Saudi Arabia but the US soft-pedalled it for political reasons. Tatas in the UK are suffering today likewise, as an amorphous EU is unequal in its ability to challenge the Chinese hegemony in steel. Britain’s enhanced ambivalence on EU membership adds to Tata’s predicament.
R Narayanan, Ghaziabad