Oil boils, SpiceJet weighs raising airfares

Hyderabad: SpiceJet, India's second-largest budget airline, is considering increasing passenger fares as runaway fuel costs threaten the carrier's weak margins. The airline is expected to announce the jump shortly. It will be done in phases to ensure the demand is not affected, SpiceJet officials said.
"We will do it at a time when the consumer is able to absorb it so that the demand does not take a hit," said the carrier's chief commercial officer, Samyukth Sridharan.
International crude oil prices have risen by more than 30% since September 2010 to over $100 per barrel mark this month owing to the unrest in the Middle East and the civil war in Libya, a major oil exporter. As a consequence, state-owned oil firms in India hiked jet fuel prices by 1.4% last week, the 12th increase in rates in a row since October last year.
SpiceJet, Kingfisher and Jet Airways had increased the fuel surcharge component of the air ticket last month by a couple of hundreds of rupees to recover the extra outgo. SpiceJet reported a decline of 13.31% in its net profit for the December quarter due to higher costs of fuel and other operating expenses.
The low-cost carrier is also looking at cost efficiencies to ensure the margins are not impacted. "Fuel prices are progressively rising and we are not comfortable. Apart from increasing fares, we will take a relook at every cost to make sure we are efficient operationally," said the chief executive officer, Neil Raymond Mills.
11/04/11 Economic Times

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Categories: spicejet Apr 2011