Aviation plans to spread wings in metros, tier-II cities

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New Delhi, Jan 11: The aviation sector is pushing for market expansion in mini metros and tier-II cities, following the footsteps of real estate industry, automobiles and organised retail sectors.

The announcement by low-cost carrier GoAir’s offer of a flat fare of Rs 1,075 for passengers flying from New Delhi to Jaipur, inclusive all taxes and surcharges, has set the aviation industry abuzz. The fare is lower than even the taxes and surcharges offered by airlines along with the fare.

At present, domestic airlines are charging around Rs 1,600 as fuel surcharge with Rs 150 congestion surcharge, and Rs 225 passenger service fees (which goes to government coffers) per ticket. These levies are included to alleviate losses owing to rising fuel costs and fuel spent due to congested airports.

GoAir’s move may lead to a price war as it may prompt other carriers to reduce surcharges or offer flat fares. The normal fares charged by low-cost carriers on the 40-minute Delhi-Jaipur route is nearly Rs 2,750 (including surcharges and taxes) while a full-service carrier charges Rs 6,310.The airline industry posted around Rs 2,000 crore losses last fiscal year. According to GoAir, the objective of the fare drop was to convert road traffic to air traffic (travel from Delhi to Jaipur is mainly done by road). “Over the last few years, metro-centric routes have reached a stagnation point in terms of escalation of passenger traffic growth,” a statement from the airlines said.