After fuel price cut, Patel sees air fares coming down in Dec

New Delhi: Aviation minister Praful Patel has predicted that air fares in the country will start falling from mid-December and expects that within six months they will “be back to normal”, driven by falling fuel prices and a higher number of passengers on planes.
Despite last week’s one-sixth decrease in aviation fuel prices and a near 4% cut in the fuel’s price earlier this week with the removal of excise duty, none of India’s airline firms has dropped fares yet, after months of raising them to combat an unprecedented and record rise in the cost of fuel earlier this year.
“The fares should be back to what they were in another six months,” Patel said on Wednesday.
An aviation analyst agreed with the minister’s forecast. “At present, the country’s airlines are not only suffering from losses due to high operating costs but also very low load factors,” said Gurinder Pal Singh Arora, senior manager at consultant KPMG. “Around late December, fares will start coming down as incoming international traffic will increase thereby increasing the number of passengers flying.”
The money saved from lower aviation fuel prices can be used to provide discounts on tickets and stoke traffic, he added.
This is the first time Patel has made a forecast on airfares; in the past, he has said that he does not like to comment on internal commercial decisions of the country’s airlines.
KPMG’s Arora, however, held a different view on when airfares will reduce to levels of last year when tickets between Delhi and Mumbai could be purchased for some Rs3,000 compared with the minimum Rs4,000-odd today. “I don’t think they will fall more than 10% (at a time),” he said. “Maybe, by the end of next year we will see fares back to what they were.”
06/11/08 Shauvik Ghosh/Livemint

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Categories: Indian Aviation- In General Nov 2008