Date:01/08/2008 URL: http://www.thehindubusinessline.com/2008/08/01/stories/2008080152641000.htm

Jet, Kingfisher, Deccan hike fares as fuel prices go up

Our Bureau

Mumbai, July 31 Jet Airways, Kingfisher Airlines and Deccan announced a hike in fares on Thursday, the same day as the oil companies increased the price of aviation turbine fuel.

While Jet increased its domestic economy class fares by 10 per cent, the business class fares were increased by five per cent. Kingfisher and Deccan on the other hand increased only the basic fare by 10 per cent in both classes. The decisions were announced late Thursday evening. The hikes will be effective from August 1, 2008.

IOC increased the average price of ATF by 2.8 per cent on Thursday also to be effective from Friday.

According to a spokesperson of Jet, “The hike in fares and ATF prices (on Thursday) is unrelated and it is purely due to commercial reasons.”

Reacting to the increase in fuel prices earlier in the day, Mr C.V. Prasad, Chairman of Travel Agents Association of India had told Business Line, “Definitely the fares will go up. The airlines feel that the market can still take an increase of 10 per cent in fares. Maybe the low cost carriers stay away from raising fares, but full service carriers’ fares will go up.”

Hike issue

The Chief Commercial Officer of the low cost carrier SpiceJet, Mr Samyukth Sridharan said, “We did expect a marginal hike in ATF prices and that’s what it has been.

Though the oil prices had cooled down in the last week or so, the average price of oil still remained on the higher side and so this hike was natural. However, if the price holds at these levels we do expect ATF price to come down next month.”

On increasing fuel surcharge after Thursday’s hike announced, he said, “We are not taking any decision on fuel surcharge increase as of today (Thursday), we would like to wait for a couple of days and since the hike has been marginal, probably its impact would also not be much. However, we would wait till Monday.”

Impact estimate

International Air Transport Association (IATA) estimates the impact of the average fuel price ($ 141.9 per barrel) for 2008 on the fuel bill of the global airline industry will be $91 billion.