At a time when airlines are struggling to stay afloat in the face of escalating fuel costs, operators have announced a hike in their basic fares both on short and long haul routes.
According to sources, the fares for journey of up to 750 kilometre are increased by Rs 1,000, while travelling more than 750 kilometre but less than 1,000 kilometre will cost Rs 2,250 more. Flying beyond 1,000 kilometre is dearer by Rs 3,000.
According to an airline official, a meeting of senior executives of all the major carriers took place in New Delhi on Thursday where it was decided to undertake the fare hike since indications suggest that state governments will not bring down sales tax on aviation turbine fuels.
Wolfgang Prock-Schaeur, CEO, Jet Airways told FE, ?The basic fares on our short haul network have gone up to Rs 1,000 from Rs 500 earlier. On long haul routes, the increase is up to Rs 3,000.? New Delhi based low cost carrier SpiceJet has also announced a fare hike ranging from Rs 300 – Rs 550 depending on the nautical miles covered by the aircraft. Though Kingfisher has not annouced a hike so far, sources indicate that the airline will undertake upto a 20% increase in its basic fares.
National carrier Air India too has hiked fares on various sectors. However, it has not specified the fare hike.
The new charges are being added to the base fare and they do not include taxes like fuel and congestion surcharges as levied by various airlines.
The announcement comes at a time when airlines in the country have suffered a staggering loss of Rs 4,000 crore in 2007-08. The projected loss during the present fiscal is expected to be double than that in 2007-08.
The airlines earlier this month had announced an increase of Rs 300 to Rs 550 in fares following an increase in the price of Aviation Turbine Fuel (ATF).
Airlines, who are already staring at a cumulative loss of over $1.5 billion in 2008-09 due to the steep and periodic increase in jet fuel prices and low priced tickets, indicated that they would pass on a part of the burden to passengers in the form of an increase in ticket prices or additional fuel surcharge. Aviation analysts are of the view that considering the state of the balance sheets of Indian carriers, most of them will be forced to pass on a substantial part of the fuel cost increase to passengers.
This comes at a time when air passenger traffic growth in India slowed to 11.12% in the first three months of 2008 from nearly 40% growth in the same period a year ago. The growth of traffic fell to just 8% in April and was expected to be better as a result of the holiday season.
Another option that airlines are evaluating is to cut down on the number of not so profitable routes. Some carriers have already rationalized the routes, and more are expected. Airline executives have said that they are undertaking an evaluation of their route plans and will restructure them if required to cut operating cost.
