Jet, Kingfisher Raise Fares on Higher ATF Prices

The two largest private airlines companies, Kingfisher Airlines and Jet Airways, have hiked fares. Airlines are foreseeing a restoration in passenger traffic, giving enough room to the two to hike their fuel surcharge up to Rs 200 on domestic sectors. The previous hike was effected in January this year.

The decision is also spurred by a 9% hike in aviation turbine fuel (ATF) prices from November 1, which will impact operational costs of airlines. Fuel expenditure constitutes about 35% of an airline's operational costs.

Currently, Indian carriers levy fuel surcharge of Rs 1,950 and Rs 700 up to and beyond 1,000 km respectively.

No-frills airlines like SpiceJet, GoAir and Indigo have not announced a fare hike yet, but are mulling an increase in fuel surcharge given the increase in ATF prices, say sources. Flag carrier Air India too has not revised its fares yet.

The preceding quarter of the current financial year saw a marginal increase of 8-10% in domestic air traffic due with various airlines finetuning their business models. Taking a cue from the rising curve, airlines are confident of gaining load even if they hike fares marginally.

Jet's online booking shows that an all-exclusive fare on the Mumbai-Delhi route for November 14 is Rs 5,829, which includes Rs 100 towards user Ddevelopment fee, Rs 229 as passenger service fee and the remaining as base fare, fuel surcharge and congestion charges. Even Kingfisher has revised it fuel surcharge in the range of Rs 100-Rs 200, depending on the distance travelled.

The continued hike in aviation fuel prices last year saw airlines increase fuel surcharge, raising the ticket prices substantially. This, in turn led to a drop in number of passengers carried by domestic airlines, causing further financial distress to them. However, with the decline in fuel prices in the last few weeks of 2008, the airlines went back on their competitive mode announcing lower fares to bring back air travellers.