Carriers plan fare hike

The era of cheap airfares is slowly ending, with domestic airlines planning to increase average fares by at least 10 to 15 per cent from the end of September, when the peak season starts.

The carriers have signalled this increase by imposing another round of fuel surcharge of Rs 150 from Sunday mid-night, which will take the total fuel surcharge to Rs 1,100. The increase in surcharge is primarily to take care of the hike in the price of aircraft turbine fuel (ATF), which was announced a few days ago.

Airline sources said an increase of Rs 600 to Rs 1,000 is necessary for all carriers to become profitable. "Carriers cannot continue to sell tickets below cost. The increase in fares will be effected by raising base fares or limiting the number of discounted tickets," they said.

For instance, only 25 per cent of Jet Airways's tickets are on full fare at present. Overall, there are seven buckets under the 75 per cent discounted fares bucket.

"Airlines will stop selling the buckets that offer the cheapest prices and focus on less discounted fares. Budget carriers will also stop offering tickets at throwaway prices," an airline executive said.

"All airlines will not increase fares by Rs 1,000 during the peak season. The increase in fares will be dependent on the supply-demand position and the shift in consumer behaviour," said Capt G R Gopinath, executive chairman of the country's largest budget carrier, Air Deccan.

A senior Jet executive pointed out that capacity growth had also slowed to 38 per cent in the first quarter of the current financial year, against 48 per cent in the corresponding period of the previous year, suggesting that airlines might go slow on fare increases.

Asked whether high fares will deter passengers from flying, Gopinath said, "Even if the price of a Bangalore-Delhi ticket shoots up to Rs 4,500 from the current Rs 3,500, it is 50 per cent lower than the fares four years ago".