Domestic air fares set to fly higher 

15 Nov, 2006. NEW DELHI: The low fare party in domestic skies is set to hit a jarring note. With cost pressures and competition squeezing margins, India's domestic airlines are preparing to push up air fares from this week in a bid to wipe some red ink off their balance sheets. 

The hike, industry insiders said, would be in the range of 3-5%. Though the airlines termed it a minor tinkering in view of the ensuing peak travel season, industry insiders told TOI that all the domestic airlines are expected to revise their fares by November 16. "The quantum of hike is yet to be fixed, and the effective date may also vary from airline to airline," an industry source said. 

In the past, average hike in basic fares have been in the region of 10-12%, while fuel surcharge increases have been limited to Rs 500 at one go. Though airlines have hiked fuel surcharges thrice this year, the basic fares have not been increased as yet. 

"The full-service carriers are talking among themselves, while the low-cost carriers are also in a dialogue to hike fares. The cost pressures are finally taking a toll and airlines are preparing to hike fares," a source said. Airline industry representatives, when contacted, said fare adjustments are being considered but refused divulge details. "We are looking at the fares in view of the rising operational costs," said Air Deccan managing director GR Gopinath. 

An Indian Airlines official, however, said the fare corrections are part of a re-adjustment exercise for peak winter season. "We will try to maximise yields by reducing the number of seats being offered on discounted fares. No decision has, however, been taken yet on a hike in basic air fares," the official said. 

But industry sources said average air fares would start climbing up from this week. "The industry has largely come to an understanding to hike fares and reduce the losses. It will now depend on when an airline can put the hiked fares into the system. While some are expected to hike fares from November 16, others might wait till the end of the month," a source pointed out. 

This, incidentally, comes at a time when crude prices across the globe have been softening and had even dropped below $60 a barrel. The airlines might have managed to save some costs on their fuel bill, but an overall increase in operational costs and shrinking yields due to cut-throat competition has started taking a toll on most players, pushing them into the red. 


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