AI, Kingfisher set for reduction in fares

New Delhi: Facing flak over giving relief to airlines without any reduction in fares, the government has now decided to lead by example. While State-run Air India is working on a plan to cut fare by 12-15% from next month, Kingfisher Airlines has decided to follow that move. The Vijay Mallya-led airline said on Monday that it will reduce fare soon and also ensure that there is no job cut despite a downturn.
And, fares could head south for two more big reasons that were announced on Monday — possible lowering of sales tax on jet fuel and likely removal of the steep transaction fee of Rs 350-10,000 being levied on each ticket by AI and Jet.
FM P Chidambaram said government will table a Bill in Parliament's coming winter session to grant aviation turbine fuel (ATF, jet fuel) the declared goods status by amending the Central Sales Tax Act. Currently some states levy as much 30% sales tax and the average rate is 21% across the country.
If the Bill is passed by both Houses of Parliament, then airlines' operating cost could reduce by a 20% and fare cuts of 10 to 15% become imminent.
And finally, the full service Indian carriers met travel agent associations on Monday in which they indicated the transaction fee of Rs 350-500 on each domestic and Rs 1,200-10,000 on international ones could be withdrawn from their direct sales channels. Agents complained that the system of transaction fee implemented after these three airlines stopped giving commission on ticket sales from November 1, was not working out and demanded they revert to the old system.
25/11/08 Times of India

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Categories: Kingfisher Nov 2008, NACIL Nov 2008