Flying may pinch 5-10% more from October onwards

Mumbai: Domestic airlines are considering a 5-10% increase in fares in the October-December quarter in view of rising prices of aviation turbine fuel (ATF) and to take advantage of peak season traffic.
ATF or jet fuel prices in the domestic market have gone up by 50% from the lows of the last quarter of 2008-09 (January-March). But airlines have not been able to pass additional costs on to passengers because of declining traffic.
With passenger numbers increasing -- July saw a year-on-year jump of 21.3% -- carriers are seriously considering increasing fares in the coming quarter.
A senior executive of a low-cost airline said this was the only way to prop up yields -- net revenue per seat -- which have taken a severe beating from intense competition.
"We have no option but to hike ticket prices by 5-10% if we want to avoid sinking deeper into losses. This quarter has seen fierce fare wars that made us change our pricing strategy to be at par with competition," he said. The official said fares will be hiked across all sectors. His airline has, however, not decided whether to hike the fuel surcharge, basic fares or both.
Jitendra Bhargava, executive director, Air India, too, said fares will go up, but didn't specify by how much. "While there are no immediate plans, we will look into this closer to the festive season," he said. A senior executive of another full-service carrier said his airline would push up fares gradually to avoid a disruption in its seat-load factor.
28/08/09 Ramiya Bhas/Daily News & Analysis

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Categories: Indian Aviation- In General Aug 2009