Flight plight: Fares may go up a further 25% in October

The aviation industry has indicated that another fare hike is imminent, as airlines look to milk the peak travel season traffic and remove some of the red ink from their balance sheets.

Sindhu Bhattacharya September 05, 2013 13:34:40 IST
Flight plight: Fares may go up a further 25% in October

New Delhi: If you think flying has become expensive in the last one week, brace for another airfare increase in October.

Several aviation industry people we spoke to this morning indicated that another fare hike is imminent, as airlines look to milk the peak travel season traffic expected from next month and remove some of the red ink from their balance sheets. But will you travel if fares are sky high? In the last few days, airlines like SpiceJet and Jet Airways have increased fares by as much as 25%.

Sabina Chopra, Co-Founder and EVP of travel portal yatra.com told Firstpost, "We expect another increase, up to 25% in October, as airlines look to cash in n festival demand."

Flight plight Fares may go up a further 25 in October

Airlines are looking to milk the peak travel season traffic expected from next month. AFP

A senior aviation industry professional associated with a low cost airline also predicted another increase in fares, perhaps equal to the quantum implemented now, is on the cards. Both, Chopra and this professional, asserted traffic is unlikely to be affected because of this fare increase but obviously, the Ministry of Civil Aviation thinks otherwise.

Speaking to reporters last week, a top official had said that the Ministry has already indicated to airlines to desist from affecting any steep increase in fares.

"Passenger growth in the first quarter was just 0.7%. If fares rise, traffic will obviously get affected. We have called a meeting of airline CEOs on September 9 and among other issues, fares will also be discussed".

So the ministry seems to be nudging airlines towards caution and may perhaps frown upon any fresh increase in fares during the peak festival season which begins next month.

Also, in a bid to ask states to lower taxation on ATF - Aviation Turbine Fuel - the Ministry has called a meeting of all Ministers and Secretaries of Civil Aviation on September 10. In this meeting, states like Tamil Nadu and Kerala (which levy almost 30% sales tax on ATF) will be asked to lower taxes. Already, three states - Paschim Banga, Jharkhand and Madhya Pradesh - have lowered sales tax on ATF to 4%. This brings down the price of jet fuel substantially, thereby lowering cost of operation of airlines.

An official of the Civil Aviation Ministry pointed out that with recent increase in jet fuel prices and simultaneous decline in rupee versus the dollar, airlines' operating costs due to jet fuel have suddenly gone up from 45-50% to 60%. In other words, now fuel alone accounts for almost two thirds of an airline's cost of operations.

The aviation professional quoted earlier, said the fare hike of up to 25% this week comes over fares which were up to 40% lower from peak levels. Fire sales and deep discounts had lowered fares in the domestic sector by as much as 40% between May and July this year.

This complicated math may be good for airline bosses who need to justify this steep increase to reduce mounting losses but for a flyer, they simply spell tough times.

Fare charts provided by yatra.com show that the seven day advance purchase fare for a one-way Delhi-Mumbai journey is up 23% to Rs 9,270. If you book 21 days in advance this comes down to Rs 6,111 which is 19% increase over August fares and does not reduce considerably even if you book a month in advance when you will have to pay Rs 6,059.

A Delhi-Bangalore ticket for seven day advance purchase is Rs 10,087, 22% up since August; Rs 6897 and Rs 6793 for 21 day and 30 day advance purchase respectively. Mumbai Bangalore is Rs 7011, Rs 5893 and Rs 4314 for 7, 21 and 30 days' advance purchase. respectively.

Updated Date:

Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply

also read

DGCA extends suspension of international passenger flights till 31 March
India

DGCA extends suspension of international passenger flights till 31 March

The restriction will not apply to cargo flights and flights specifically approved by the aviation regulator

Indian shooter Manu Bhaker demands action against two Air India employees for alleged harassment
Sports

Indian shooter Manu Bhaker demands action against two Air India employees for alleged harassment

Manu, one of the country's brightest medal hopes at the upcoming Games, thanked Rijiju for his prompt intervention but is also hoping for action against the Air India officials at Delhi airport. Later, Air India, too, apologised for the conduct of its staff.

Bengal BJP chief Dilip Ghosh promises single-phase polls in state if voted to power
India

Bengal BJP chief Dilip Ghosh promises single-phase polls in state if voted to power

Ghosh's remarks have come amid Mamata Banerjee's allegations that West Bengal Assembly polls are being held in eight phases to allow for better management of the BJP's poll campaign in the state