Air India cuts basic fares, Jet follows suit

"New Delhi | Mumbai: Following the repeated pleas of civil aviation minister to slash air fares, the state-carrier Air India today responded by announcing a sharp cut in the basic fares on 20 domestic routes. The announcement was immediately followed up by the market leader, Jet Airways, which cut basic fares on economy class up to 40 per cent on the value carrier JetLite, with immediate effect. The quantum of rate cut on an Air India ticket varies between 35 to 82 per cent on all leading sectors, effective from Tuesday. Following the sharp decline in the price of Aviation Turbine Fuel (ATF), which had reached August 2005 levels, Air India was the first airline to announce a Rs 400 reduction in fuel surcharge in December-beginning, that was followed by Jet Airways and Kingfisher Airlines.

With the latest cuts, a one-way Air India ticket on Delhi-Mumbai sector has been reduced by 49 per cent at Rs.1,675 from Rs.3,300. Similarly, one-way Mumbai-Bangalore basic fare now stands at Rs 1,200, down by 52 per cent from Rs.2,475. The highest reduction is on the Chennai-Bangalore sector, where the basic fare after the cut is Rs. 200, down by 82 per cent. These fares are exclusive of taxes and fuel surcharge. On a JetLite ticket, a Mumbai - Delhi economy class basic fare now stands at Rs 750 and a Mumbai – Chennai basic fare will be Rs 595.

On Sunday, Kingfisher had announced a rate cut from January 1, without specifying the quantum of cut. When contacted, a spokesperson from the airline said that a decision on the quantum of cut in their basic fares would be announced shortly. Till now, airlines have resisted from effecting a reduction in the basic fares. However, with oil marketing companies set to review ATF prices on December 31, another downward revision of jet fuel seems likely. The fuel is now sold at Rs 32,691.28 per kilolitre in Delhi after prices were slashed by Rs 4,208.37 in the first week of December.

“The fare cuts are allright but the only factor will be that it should boost the airlines' passenger load factor (PLF) as it is now below 70% even in this peak season. Earlier when they were charging low prices, they had PLF above 70%,” said Sandeep Shenoy of Pioneer Intermediaries."

"Airfares would get cheaper by over 25 per cent after most airlines announced major cuts in fares on many routes, including the busiest Delhi-Mumbai sector.

An all-inclusive economy-class ticket from Delhi to Mumbai in a full-service carrier could now cost less than Rs 5,000.

On Tuesday, state-run Air India announced reduction of up to 82 per cent in its basic fares on 20 of its busy domestic sectors. This would result in much lower final fares, which would include taxes and levies of about Rs 3,000 over and above the basic fare.

Falling fuel costs and decelerating demand for air travel have forced airlines to cut fares. Aviation turbine fuel (ATF) prices have more than halved since the peak prices of Rs 70,000 per kilolitre in August.

“Following the gradual reduction in the price of ATF, we have decided to reduce the fares,” a spokesman for Air India said.

Jetlite, the low cost arm of Jet Airways, also announced up to 40 per cent reduction in its basic fares and a Delhi-Mumbai one-way economy ticket would cost about Rs 3,900 on the airline.

Kingfisher Airlines said it would cut fares in the coming month, but has not announced the quantum of reduction. Low-cost carrier SpiceJet has also announced fares that start with a basic fare of as low as Rs 99."

(HT News)

Shrish Pandey


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