Budget carriers set to cut fares by 15 per cent

Mumbai: Air travellers finally have some reason to cheer. The country’s three low-cost airlines — SpiceJet, IndiGo and GoAir — are likely to slash fares between 10% an d 15% from November 15.
This follows the oil companies’ decision to cut aviation turbine fuel (ATF) prices, coupled with the government’s move to withdraw the 5% Customs duty on jet fuel. The airlines have taken an in-principle decision to slash fares to pass on the benefit of the fall in ATF prices to customers. An announcement is expected in a couple of days.
Meanwhile in a related development, state-owned oil firms once again cut jet fuel prices by up to Rs 2,100 per kilolitre on Monday night. Another cut in ATF prices is likely to come on November 15. Thus, there has been a 20% reduction in jet fuel prices in three days.
Interestingly, these three airlines control one-fourth of the domestic market. Sources said these airlines plan to announce the decision on the same day to get maximum mileage against full-fledged carriers — the Jet-Kingfisher alliance and Air India — which have no plans to cut fares.
There are reports that the ATF prices would be further slashed within the next few days, in line with the drop in crude oil prices. A top SpiceJet source said: “There could be a fare cut in some sectors, but nothing has been finalised as yet. SpiceJet will take the final call on Wednesday.” He declined to give details.
Post the proposed cut, a Mumbai-Delhi ticket by SpiceJet, IndiGo and GoAir would cost around Rs 3,800, including taxes, during non-peak hours as compared to Rs 4,475 at present. In comparison, Jet, Kingfisher and Air India’s fares in the sector are around Rs 7,237, Rs 5,838 and Rs 6,594, respectively.
04/11/08 Mithun Roy/Economic Times

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Categories: Indian Aviation- In General Nov 2008, Low Cost General Nov 2008