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It's Certainly Something To Cheer About For Air Travellers, Air India Slashes Fares By Up To 70%
By ugeshji, Section News Posted on Tue Apr 21, 2009 at 03:26:21 AM EST
Massive Cut Despite 6.7% Increase In Aviation Turbine Fuel Prices, Hike In Fares By Competitors Jet Airways, Kingfisher
There is certainly something to cheer about for air travellers. State-owned national carrier Air India has decided to cut fares by as much as 70% on 35 sectors, starting Monday. The massive cut in fares will take place despite a 6.7% increase in aviation turbine fuel (ATF) prices last week. Even Air India's direct competitors such as Kingfisher Airlines and Jet Airways have hiked fares by around 8% two days ago while low-cost carrier SpiceJet said it will increase fares in a few days. A senior Air India official confirmed the fare cuts to ET and said Air India wants to increase its passenger load factor (PLF) to boost bottom lines. The load factors for domestic carriers dropped to around 65% in March from a level of 73% in February. "The reduced fares have no hidden conditions like being for a limited offer period. Passengers have to buy their tickets 10 days in advance through the website, travel agents or the company's sales offices. These reductions in fares are mainly on tier-II routes connecting Mumbai and it is over and above our offer on the summer fares," the senior official added. Source: Economic Times Air India slashes fares by up to 70% Click On "Full Story" For More...
For example, on the Mumbai-Hyderabad sector, Air India has brought down the one-way fare to Rs 2,694 (this is all inclusive except the user development fee and is a drop of 70%. Similarly, the one-way Mumbai-Mangalore fare is now down to Rs 2494 which is down by almost 60% from the earlier price of Rs 5875. Mark Martin, senior advisor, KPMG, said: "Airlines need to stimulate the market as load factors have been falling since August. Aggressive pricing is a gamble and it may hurt airlines in the long run."
The plunging domestic air traffic has hit airlines hard which have been forced to hike fares. Ticket prices need to go down to attract more passengers. "Passengers have actually opted for travelling by trains," said an analyst with a domestic brokerage firm. A drastic cut in airfares would perhaps be able to prop up the balance sheet of the sagging airline industry which is expected to post a combined loss of $2 billion for fiscal 2009, said industry trackers. On Sunday, the Kingfisher and Jet Airways increased fuel surcharge by Rs 200 for sectors less than 750 km and by Rs 300 for sectors over 750 km after oil companies raised ATF prices for the third consecutive time in a month. Jet fuel prices vary at airports depending on local taxes. The average ATF prices are now at Rs 2,066 per kl, which accounts for 40% of an airline's costs.
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