Airfares are going up. Following a recent sharp rise in jet Fuel price, full service carriers — Jet and Kingfisher — have hiked fuel surcharge on short and medium haul domestic flights by Rs 100 and Rs 200 respectively. Budget carriers like SpiceJet have also introduced a similar hike. National carrier Air India (domestic) is yet to take a call on raising this surcharge.

From Friday, fuel surcharge on domestic routes stands revised upwards by Rs 100 for sectors below 1,000 km and by Rs 200 for sectors above 1000 km, a Kingfisher statement said. Possibly to avoid charge of hiking fares in a cartel, similar hike on all domestic flights operated by Jet, JetKonnect and JetLite was implemented from Thursday. Now fuel surcharge ranges from Rs 1,600 to Rs 3,000.

While airline hiked surcharge following a recent 9% hike in fuel price, fare hike was on cards. Industry sources said the recent economic recovery has led to revival of passenger numbers with the negative growth of past few quarters reversing and numbers actually registering a rise in past couple of months. However, airlines were complaining that their yields were still low as this growth was accompanied with low fares.

Because of huge accumulated losses, almost every airline is looking at raising yields by hiking fares. In the past few quarters of slowdown, airlines focussed on cutting costs, which led to trimming fleet size, wage bills and even layoffs. "Maximum cost cutting has already been done and we have to raise revenue now," said an airline CEO. The big three, especially Kingfisher and AI, have run up thousands of crores as dues to oil companies and airport operators. So unless fares are hiked and cash generated to start paying the old dues, the aviation industry will be on a shaky footing.

Source:
Airfares up as KF, Jet hike fuel cess
The Times of India
Date- 7 November 2009
Edition- New Delhi