Kingfisher cuts basic fare, impact on ticket 20%

New Delhi: Full service carrier Kingfisher Airlines today announced that it has cut domestic basic fares by up to 65 per cent, indicating an average reduction of around 20 per cent in overall fares. Kingfisher's announcement follows moves by rival Jet Airways and national carrier Air India to cut their basic fares by an average of 50 per cent and 40 per cent respectively.
Jet Airways also announced some special fares for its international routes today, including Singapore, Hong Kong, Bangkok, London and New York.
"The falling prices of jet fuel facilitate such initiatives, which will benefit consumers and also stimulate the industry. We will aggressively pursue sales and share and this will help sustain increased load factors in the shoulder season between February and April," said Vijay Mallya, Chairman and CEO of Kingfisher Airlines.
Last week, Kingfisher had announced a range of fare cuts without specifying the quantum of cuts across sectors.
While domestic fares have been marketed well, the airlines have kept the artificial floor of fuel surcharges intact at Rs 2,500-3,000.
Extending the fare cuts to the international routes, Jet Airways today announced special fares such as a Rs 7,480 basic return fare for a Mumbai-Singapore flight, while the usual economy fare for the same flight costs Rs 32,500. A Mumbai-New York economy class return ticket would now come at a basic fare of Rs 32,600 while the usual economy class return tickets would cost more than Rs 1 lakh. However, there is an extremely limited inventory at these fares.
The prices of aviation turbine fuel (ATF), which accounts for the more than 50 per cent of an airline’s costs, have come down by around 60 per cent compared to the prices in August. As a result, ATF currently accounts for less than 40 per cent of an airline’s costs. Mark Martin, senior advisor, KPMG, said, "Airlines are thinking smart. They know they can damage themselves by pricing aggressively, so they are keeping their long-term interests intact by retaining the fuel surcharge. At the same time, they have realised the need to stimulate the market, and hence the fare cuts."
03/01/09 Business Standard

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Categories: Kingfisher Jan 2009