Airlines plan 3-tier fuel surcharge

New Delhi: Soaring oil price and falling growth levels are now forcing domestic airlines to think in terms of a three-tier fuel surcharge. In April, they had introduced a two-level fuel surcharge — a lower one for below 750 km and higher for beyond — to prevent losing short haul travellers to trains and buses.
"Oil price are at terrible level now. We are looking at three-tier surcharge if jet fuel goes up again this month-end. While the exact details are being worked out, this time it could be — below 750, 750-1,000 km and above or something like that," said Siddhanta Sharma, SpiceJet executive chairman. "For short sector flights, the price is too high unless the surcharge is lowered," he added.
Till March, there used to be a uniform fuel surcharge of Rs 1,650 per passenger. In April it was raised to Rs 1,800 for flights covering less than 750 km and Rs 2,000 for other domestic flights. In May, the surcharge was further increased to Rs 1,950 and Rs 2,350 for short and medium haul flights respectively. With crude over $ 125 per barrel, the industry fears that another hike in jet fuel price is on cards and that surcharge would have to go up again. Because of high taxes and surcharge, airlines, especially low cost carriers (LCCs), have been offering tickets with basic fares of Re 1, Rs 3, Rs 99 or even zero. Some full cost carriers have also started offering low overall ticket costs for popular summer getaways from Delhi like Dharamsala.
20/05/08 Saurabh Sinha/Times of India

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Categories: Indian Aviation- In General May 2008