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| Airfares set to climb 5-10% |
| BS Reporter / New Delhi Apr 19, 2009, 00:50 IST |
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After a spate of fare cuts, full-service carriers Jet Airways and Kingfisher as well as low-cost carrier SpiceJet have decided to increase fuel surcharge by as much as Rs 300 for long-haul flights and Rs 200 on short routes.
The fuel surcharge now stands at Rs 3,000 for long flights and Rs 2,150 for short flights. Experts said that this will lead to a 5-10 per cent increase in overall fares. Indian carriers came up with a fuel surcharge a couple of years back to pass the rise in jet fuel prices to travellers.
The rise in the surcharge comes after the third round of increase in aviation turbine fuel prices by public sector oil companies on April 15.
Statements put out by Jet and Kingfisher said that the increased surcharges will be effective from this midnight. It will also be applicable for Jet’s value carrier, JetLite. A SpiceJet spokesperson said that the increase in surcharge would come into effect in the next few days. Sources said that other low-cost carriers like IndiGo would follow suit.
| AIRFARES UP AGAIN |
| Full service |
Low-cost |
| Before |
After |
Before |
After |
| Mumbai-Delhi |
| 6,246 |
6,546 |
3,279 |
3,579 |
| Mumbai-Kolkata |
| 6,825 |
7,125 |
5,679 |
5,979 |
| Delhi-Kolkata |
| 7,403 |
7,703 |
5,279 |
5,579 |
National carrier Air India however said that there would be no increase in the surcharge or the overall fares, at least in the near term. “We are not following the others in increasing prices,” said an Air India spokesperson.
The first big reduction happened in the month of January, as a result of which fares across airlines and sectors had decreased by almost 30 per cent. This had caused a marginal increase in the current sales of airlines, although there was an almost 30 per cent rise in advance bookings, which ensured healthy load factors for airlines for the month of February.
However, in a kneejerk reaction to their immediate sales not picking up, airlines increased the fare in the beginning of February by slashing their low-end special fares altogether. This was followed by another round of decrease in fares in the following week and then an increase again.
The month of March saw leading airlines like Kingfisher announce a 65 per cent decrease in fares, which was followed by other full-service and low-cost carriers. The airlines also slashed their fuel surcharge by announcing all inclusive fares of Rs 1,722 and Rs 2,700.
Sector experts said that the current round of increase in airfares will affect the already depleting load factors of airlines and thus affect their bottom lines. “The loads in March were much lower than the same period last year. These are signs that this will not be a typical April when airlines would be able to cash in on higher demand by increasing prices. Consumer confidence is still low,” said Dhruv Shringi, CEO of travel portal Yatra.com.
“Typically, the lowest fares need to be in the region of Rs 3,300 to spurt demand at this stage, while fares are still hovering around Rs 3,300-3,800. There needs to be a price cut of another 10-15 per cent for demand to come back,” he added.Passenger load factors for domestic carriers dropped to around 65 per cent in March from 73 per cent in February.
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