The Hindu Business Line : Domestic airlines hike fares to beat rising costs

New Delhi, Mumbai, June 19 Domestic air travel has become more costly. With the price of aviation turbine fuel (ATF) soaring, almost all airlines including Air India, Jet Airways, JetLite and the low cost airline, SpiceJet have announced an increase in basic fares.

Air India and Jet Airways will now charge a minimum basic fare of Rs 1,000 for distances of up to 750 km, while the basic fare for longer journeys will be Rs 3,000. “The lowest basic fare on Air India between Delhi and Chennai and Delhi-Hyderabad used to be Rs 2,225 and Rs 1,500 respectively. Now for both the sectors the basic fare will increase to Rs 3,200 and Rs 3,250 respectively,” sources indicated. While the fare increase announced by Jet Airways became effective from Wednesday evening, the increase in fares of Air India will become effective from Friday.

JetLite too announced that it would charge a basic fare of Rs 500 for distances of up to 750 km and a base fare of Rs 2,000 for distances of over 1,000 km.

Kingfisher Airlines has not announced a fare hike yet, but it too will increase fares in the coming days. “A hike is inevitable given the fact that input costs have been rising steadily over the recent past,” an airline spokesman said.

Among the low cost airlines, SpiceJet has decided to raise basic fares by between Rs 300 and Rs 400. Sources indicated that the latest hike is likely to see an increase of about 15 per cent in the average per passenger yield of the industry, sources indicated.

Unlike the full service airlines, the low cost airlines are not indicating the minimum fares being fixed by them. “The low cost airlines have decided to keep a differential of between Rs 500 and Rs 700 from the basic fares charged by full service airlines. So if the base fare for a distance of up to 750 km is Rs 1,000 a low cost airline may start its pricing at Rs 500,” said a senior official of a low cost airline.

The fuel surcharge of Rs 2,350 and Rs 2,900 charged currently by all the airlines will continue unchanged, airline officials said.

Airline officials indicated that the increase in basic fares was the beginning of a number of measures that the industry will consider to improve its fiscal health. According to the Ministry of Civil Aviation, ATF prices rose from Rs 21 a litre in 2004 to Rs 70 a litre at the moment, while the average fare declined from Rs 6,050 in 2004 to Rs 3,950 during 2007.