Airfares to rise by 10%

Soaring global oil prices finally impact the consumers' wallet

BY A CORRESPONDENT
April 29, 2006

Domestic airline companies across the country are geared up to hike fares, thanks to the rise in global oil prices. Jet Airways has already announced that a fuel surcharge of Rs 300 would be levied on all domestic (business and economy fares) from May 1. Other airlines including GoAir, Kingfisher Airlines and Air Deccan will follow suit. Air Deccan will be imposing a fuel surcharge of Rs 300 in May, while SpiceJet has announced an increase its existing surcharge (by Rs 50-100) from Thursday. Kingfisher and GoAir have not yet decided on the hike amount, but it is likely to be on par with other airlines. With five major players committing to fare hikes, IA and Air Sahara are expected to announce a similar hike soon.

The fare hike will affect international travel as well, with Lufthansa, Singapore Airlines, Air France and British Airways all set to raise fares to cover the increase in fuel prices. Global crude oil prices hit $70 a barrel in April, with jet fuel costs showing an increase of Rs 10,526.00 per kilo litre since last year. This increase by 35% in jet fuel costs will have a huge impact on operating costs, as Jet fuel costs account for 35% of total operating costs. Thus aviation companies have no choice but to either raise fuel surcharges or hike fares.

Depending on whether the government increases excise duty on ATF to an addition 16 per cent, fares will most probably go up by 10 per cent. India's leading marketer of ATF, Oil major Indian Oil, is expected to announce a significant increase in prices by April 30.

For Jet Airways (and most other airlines), the increase in fuel surcharge will be levied on tickets, with passengers having to pay the surcharge for the local leg of an international journey as well. Tickets sold before April 30 will not carry the surcharge, although ticket changes will be affected to incorporate the additional surcharge. In addition, it may apply for excursion and discount fares as well. For SpiceJet, Rs.50 and Rs.100 additional surcharge will be levied on flights below and over 1,000 KM respectively.

Meanwhile, international fares have also been steeped, with SriLankan airlines adding $10 to return flights from India to Colombo, Maldives and Pakistan, and $30 for return flights to Europe, Canada, US and Australia, from May 5 onwards. In addition, Lufhthansa will increase fuel charge by 10 euros, British Airways by £10 on return flights between UK to India, and Air France by seven euros this week.