The strange world of Indian air fares explained

For the second time in two months air fares have been slashed following the dramatic fall in fuel prices across the world. The latest cut in prices began with Jet Airways reducing basic fares by 40%. Two days back the state owned Air India ( formerly Indian Airlines) announced a reduction upto an unbelievable 80% in basic fares. This would apparently mean a passenger who was paying Rs 4000 for a domestic Jet flight would now have to pay Rs 2400 ( going by the 40% reduction)!. Right?
No, wrong is the answer. If you ask why, the reply would be the strange way fares in India are broken up.
Take the example of Spicejet. The airline is offering a basic fare of Rs 99 for any sector in India is the ticket is booked 21 days in advance. But of you think you are going to travel to, say, Bangalore from Kolkata for Rs 99 plus some amount in taxes and charges, you would be mistaken.
The truth is you have to dish out Rs 3198 for the flight. Rs 99 basic fare + Rs 3099 taxes and fuel surcharge !
Air India’s Kolkata to Delhi fare has comedown from Rs 4000 to Rs 2000.Does this mean a 50 % reduction in total fares? Not quite! Previously passengers would dish out Rs 7000 ( Rs 4000 + Rs 3000 ). Now he has to pay Rs 5000 ( Rs 2000 + Rs 3000).
India might be the only country where taxes and fuel xurcharges ridiculously exceed the basic fares. When the basic fare in a 500 kilometre route goes down fronm Rs 500 to Rs 200 the airline markets iot as a fare reduction by more than 50%. The stark reality is – a ticket would cost Rs 2500 plus 500) or Rs 3000 before the cut. And Rs 2500 plus Rs 200 that is Rs 2700 after the reduction. So the net reduction is a mere 10 % and not 50% as a passenger may be led to believe.
Now let's discuss just what taxes and fuel surcharges constitute. As far as taxes are concerned, Rs 250 per ticket is charged as PSF ( Passenger Service Fees). Beyond this, there is no amount charged by the government against a ticket. An airliner charges Rs 2400 to Rs 2800 as fuel surcharge. This amount does not go to the government. The airlines introduced this charge to compensate for the high rate of sales tax (40%) on aviation fuel. As the fuel prices began to rise rapdly in the first half of 2008, the airlines also began to hike the fule surcharge.
03/01/09 Abu Mounir/IT Examiner

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Categories: Indian Aviation- In General Jan 2009