Air fares may fall 15% as AI plans cut

New Delhi: Flying within the country is all set to get cheaper by 10 to 15% in coming days. Alarmed at the sharp fall in domestic air traffic due to a mix of factors like high airfares and overall economic slowdown, the government has decided to tackle at least one of these issues by virtually forcing airlines to lower fares.
Since aviation turbine fuel (ATF) prices have fallen dramatically in the past three months, aviation minister Praful Patel said state-owned Air India (domestic) is going to lower fares in coming days. "Being direct competitors, private airlines will have to react and possibly follow suit. ATF prices have fallen substantially and airlines must pass on the benefit to the commom man by making flying affordable again," he said.
Reacting to the minister's call for fare cuts, Kingfisher said it will take a decision on the issue on Saturday. Jet said it has just reduced fuel surcharge by Rs 400 and is not considering any further cut at the moment. Low cost carriers are reportedly working on both lower fares and attractive advance booking prices to get passengers back on board.
After seven successive falls since September, the ATF price today is lower than the November 2005 level when domestic airlines introduced a fuel surcharge of Rs 200 per flier. But till last month, the fuel surcharge was Rs 2,350 for short and Rs 3,100 for medium-haul flights.
Then in a bid to push demand, Patel got AI (domestic) to cut surcharge by Rs 400 and bring the figure down to Rs 1,950 and Rs 2,700 for short and medium haul flights. As a result, other airlines like Jet and Kingfisher were also forced to follow suit. This time also, AI may be asked to take the lead by slashing fuel surcharge so that others have no option but to follow.
17/12/08 Saurabh Sinha/Times of India

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Categories: Indian Aviation- In General Dec 2008, NACIL Dec 2008