Air India to cut fares by 12% in December

Mumbai: As civil aviation minister Praful Patel’s plea turned into aggression, state-owned carrier Air India decided to reduce airfares by 12%, which is likely to be implemented in mid-December. An internal National Aviation Company of India (NACIL) team, which runs Air India, is planning a 12% cut in fuel surcharge in the domestic metro routes first, and then across the country in early January. A senior Air India official confirmed this to ET.
“A decision has been taken, and will be send for approval soon,” said an Air India official on condition of anonymity. When contacted, Air India executive-director Jitendra Bhargava said: “A decision on fares could be expected shortly. There is a need to stimulate the market by making more people fly.”
The 12% reduction in fares would be in fuel surcharge, which now stands as high as Rs 3,100 in metro routes compared with Rs 1,350 last November. Airlines had imposed the fuel surcharge on fares following the surge in crude prices.
If Air India decides to pass on the benefits of ATF prices by slashing fuel surcharge by 12%, then the airfare in the Mumbai-Delhi sector could come down to Rs 6,068 inclusive of taxes.
The price of aviation turbine fuel (ATF) has come down to Rs 39,767 per kilolitre (KL) compared with Rs 41,417 per KL last November.According to government data, air traffic grew by only 2.3% between April and August compared with 38%, a year earlier.
An aviation expert said higher fares have scared away passengers. Airlines have increased fares five times since early this year, stating that ATF prices have shot up, but now when ATF prices have actually come down drastically, carriers are giving other excuses to get more reliefs.
Praful Patel has asked carriers to cut fares in response to the government’s support to the industry on Saturday at a summit in Delhi. ET had first reported in its November 7 edition that Indian carriers are under pressure to act as the aviation ministry wants them to pass on the benefits of a series of measures announced by the government to bail out the beleaguered industry.
24/11/08 Mithun Roy/Economic Times

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Categories: NACIL Nov 2008