Fuel prices expected to fall but airlines still plan to raise fares

Mumbai: Rising Indian airfares show no sign of pausing even though airline fuel prices are expected to fall in the coming weeks.
Indeed, the big three airline groups—Jet Airways (India) Ltd, Kingfisher Airlines Ltd and National Aviation Co. of India (Nacil)—are all considering raising fares by between 10% and 20%, airline executives say.
The rest, mainly low-cost carriers, have not taken a decision yet on fares for September and October, but typically follow the lead of so-called full-service airlines. The potential price hikes come at a time when oil marketing firms have indicated that there will be a downward revision of jet fuel prices, also known as aviation turbine fuel, or ATF, by at least 15% for September, triggered by dropping global crude oil prices.
India’s carriers expect to post a combined loss of $2 billion, or Rs8,680 crore, in 2008-09, primarily due to high prices of jet fuel, which constitute up to 60% of the operating cost of some airlines.
Jet Airways needs to increase its fares by at least 20% to cover its cost of operations and make a reasonable or small profit, said Sudheer Raghavan, the airline’s chief commercial officer.
"..We will consider increasing the fares in coming months,” said a Kingfisher Airlines executive, asking not to be identified.
At Nacil-run Air India, a decision on increasing fares would be taken shortly, said an executive, also not wanting to be named.
24/08/08 P.R. Sanjai/Livemint

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Categories: Indian Aviation- In General Aug 2008