Air fares 30% below AC-I

MINI-BUDGET 2004

Domestic airfares are now around 30-40 per cent cheaper than first class air-conditioned train fares.

The government's decision to abolish inland air travel tax (IATT) and pare excise duty on aviation turbine fuel (ATF) has had an immediate impact on air travel with all major airlines passing down the benefits to passengers, taking the "apex fares" below first class AC train fares.

For instance, apex fares (applicable tickets purchased 21 days in advance) on the Delhi-Chennai, Delhi-Mumbai, Delhi-Bangalore routes offered by Indian Airlines (IA) now stand reduced to Rs 3,940, Rs 3,250 and Rs 4,635 from pre-budget level of Rs 4,500, Rs 3,705 and Rs 5,300.

The new fares are substantially lower than the first class AC train fares of Rs 5,570, Rs 4,135 and Rs 4,635 on these sectors, respectively.

The normal fares on the Delhi-Mumbai, Delhi-Chennai and Delhi-Kolkata routes stand reduced to Rs 6,575, Rs 9,780 and Rs 7,465 from Rs 7,350, Rs 11,215 and Rs 8,555, respectively.

Sunil Arora, chairman and managing director of Indian Airlines, said, "The most important relief is the reduction in excise duty on ATF by half to 8 per cent. This will result into an annual saving of around Rs 60 crore for IA. This will facilitate the airline to generate more internal resources for its fleet renewal and expansion."

The excise duty cut on aviation turbine fuel from 16 per cent to 8 per cent will trigger a decline of Rs 1.5 to Rs 1.75 per liter in ATF prices that will cause a reduction in operational costs.

"The basic domestic airfare is expected to come down by around 20 per cent," Ashwini Kakkar, chief executive officer and managing director of Thomas Cook (India) told Business Standard.

Officials of Indian Airlines, Jet Airways and Air Sahara said a decision on further fare reduction on account of a cut in the excise duty on aviation turbine fuel would be taken in due course.

Air tickets on the Delhi- Jammu, Mumbai-Kolkata, and Kolkata-Delhi routes under the new apex fares cost Rs 2,075, Rs 3,940 and Rs 3,330 against first class train fares of Rs 2,211, Rs 4,178 and Rs 4,375, respectively.

The normal fares on the Delhi-Jammu, Mumbai-Kolkata, and Kolkata-Delhi routes stand reduced to Rs 4,361, Rs 7,465, Rs 7,480 from Rs 4,985, Rs 8,555 and Rs 8,570, respectively.

Saroj Datta, executive director of Jet Airways, told Business Standard, "We would not be charging the passengers the amount that we are not being charged by the government."

Ranjit Malkani, CEO, Kuoni Travel group (India), said, "The move will translate into air travel becoming more affordable for the middle class. The measures will provide a big boost to the domestic travel industry with some travellers making a shift from railways to airlines. This will also contribute to an increase in domestic tourism with travel to popular holiday destinations like Goa, Kerala, Rajasthan gaining the most."