Financial Daily from THE HINDU group of publications
Friday, Apr 28, 2006
Financial Daily from THE HINDU group of publications Friday, Apr 28, 2006 |
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Logistics - Outlook Industry & Economy - Petroleum Domestic airfares set to turn costlier Our Bureau
Oil price impact Jet will levy fuel surcharge on both business and economy class. The charge will also be applicable on the domestic leg of an international passenger.
New Delhi , April 27 The rise in global oil prices is beginning to impact on domestic air travel. While Jet Airways today announced that it would levy a fuel surcharge of Rs 300 on all domestic faresfrom May 1, the other airlines, including the low-cost airline Air Deccan, hinted at either in increase in fares or the applicable fuel surcharge soon. Jet Airways decision to increase fuel surcharge would apply to both business and economy tickets, the airline said in a statement. "The fuel surcharge, which has been necessitated by the continued escalation in prices of aviation turbine fuel, will be levied on all tickets purchased within India and abroad whether they are issued against the rupee or dollar tariff," the statement adds. The surcharge will also apply to the local leg of an international journey being undertaken by the passenger, which means that if a passenger travels Delhi-Chennai-Singapore then he would have to pay the surcharge for travel between Delhi and Chennai. In the domestic market, if a passenger travels on the Delhi-Mumbai-Thiruvananthapuram sector without a break in journey then the fuel surcharge payable would be Rs 300. The surcharge, however, will not be applicable on tickets sold before April 30, although any changes made in the ticket would attract payment of the additional surcharge.
No choice
In the recent past the global price of oil has risen above $70 a barrel and experts anticipate it staying at this level for some time. On April 1, the average price of aviation turbine fuel (ATF) in the domestic market was Rs 37,500 per kilolitre, marginally down from the October 2005 price of about Rs 38,500 per kl. This has left the aviation industry with little choice but to increase the fuel surcharge or raise fares. Fuel accounts for almost 35 per cent of the operating cost of domestic airlines.
Kingfisher Air
The Chairman and Chief Executive Officer, Kingfisher Airlines, Mr Vijay Mallya also hinted at a fare hike. "The cost of fuel is going up. We have not yet taken a decision on what we should do. But all airlines pass on the increase to passengers," said Mr Mallya. The Air Deccan Managing Director, Captain G.R. Gopinath said although the airline planned to increase fares a decision was yet to be taken on whether the airline should levy a surcharge or increase the basic fare. The airline is said to be looking at levying a surcharge of between Rs 275-325, sources said. The low cost airline Spice Jet that earlier in the day announced a fuel surcharge of Rs 50-100 decided to defer a final decision till the first week of May. The state-owned Indian Airlines, was yet to firm up its plans.
Related Stories: More Stories on : Airlines | Outlook | Petroleum | Jet Airways (India) Ltd
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