Fares cut, why not surcharge

Mumbai: Aviation turbine fuel prices have hit the bottom of the barrel. At Rs 32-38 a litre it is at its lowest level in the last four to five years. Then why are air travellers still paying a fuel surcharge, a levy imposed by airlines way back in 2006 to offset the impact of then skyrocketing oil prices?
It is a question most flyers and consumer rights organisations are asking, as ATF prices are now much lower than in 2006. Though several airlines recently reduced air fares on domestic routes, fare cuts which they said were due to lower ATF prices, the cut was in the basic fares and not the fuel surcharge. However, the fuel surcharge is always increased every time there is a rise in ATF prices.
Even a 90% cut in basic fare would not bring as much drop in fare as say a 10 or 20% cut in fuel surcharge. For instance, a Spice Jet air ticket (a really cheap one) for a Mumbai-Delhi flight for January 2, 2009, is Rs 3,678. Out of this the base fare is Rs 745, fuel surcharge is Rs 2,700 and passenger service fee is Rs 233, says Abhay Suri, a frequent flyer.
In December 2005, when ATF cost more than what it costs now, a Mumbai-Delhi low-cost carrier's ticket came at Rs 1,000. Even last December, when the fuelsurcharge was Rs 1,650, mid-week tickets on this route started at a low of Rs 1,900.
On December 29, Jet Airways announced a cut in basic fares, while Air India followed suit the next day. Earlier this month, Air India, Jet Airways, Kingfisher Airlines and Indigo had cut fuel surcharge by a measly Rs 200-400 per passenger. The move came as crude prices plunged to $46 a barrel from $147 a barrel in July 2008.
Air India, Kingfisher and Jet brought down their fuel surcharges from Rs 2,350 per passenger on routes with a distance of less than 750 km and Rs 3,100 per passenger on routes over 750 km to Rs 1,950 per passenger and Rs 2700 per passenger, respectively.
State governments have firmly opposed any unilateral decision by the Centre to classify aviation turbine fuel as declared goods and tax it at a lower rate of 4%. States are also not keen to cut the sales tax on ATF as it will further hurt their revenue collections. Sources say it would mean a combined revenue loss of about Rs 2,000 crore.
On the other hand Kanoop Kanuga, chairman, western region, Travel Agents Association of India, labels airlines moves to cut fares as too little, too late.
05/12/08 Manju V/Times of India

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Categories: Indian Aviation- In General Jan 2009