IA raises fares, SpiceJet, IndiGo may hold back

New Delhi: Indian Airlines, now known as AI (domestic), on Friday has decided to increase its basic fare by 10% across the board, following Kingfisher and Jet Airways, after the rise in jet fuel price. Low-cost carriers (LCCs) like SpiceJet and IndiGo are yet to take a call, though industry sources said they are unlikely to raise fares any more, fearing loss in passenger traffic.
With LCCs not hiking fuel surcharges last month and full service airlines raising basic fares by 10% in August, the difference in fares of these two segments has once again become significant.
For instance, a one-way Delhi-Mumbai on IndiGo, SpiceJet and JetLite will cost Rs 5,325 while Jet and Kingfisher will charge Rs 6,775 and Air India Rs 6,625. The difference is due to LCCs charging a fuel cess of Rs 2,900 while the full service ones charge Rs 3,100. And after the 10% hike in base fares, a full service carrier has a figure of Rs 3,300 while LCCs charge Rs 2,000 under this head. The combined effect is almost Rs 1,500 one way or a good Rs 3,000 for a return trip.
Jet and Kingfisher, which have both a full service and low cost airline in their fold, are keen to retain the price-sensitive customer. So JetLite did not hike base fares on Friday and the fuel surcharge remains Rs 2,900. The UB Group on Friday withdrew the 10% hike in base fare of Deccan.
02/08/08 Saurabh Sinha/Times of India

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Categories: Air India Domestic Aug 2008, Indigo Airlines Aug 2008, SpiceJet Aug 2008