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Allow us to raise fares: airlines to govt

business Updated: Oct 10, 2011 02:53 IST
Saubhadra Chatterji
Saubhadra Chatterji
Hindustan Times
Saubhadra Chatterji

Hit by mounting losses and high debts, private airlines have asked the government to allow them to raise fares.

Representatives of private airlines have met senior government officials in the finance and civil aviation ministries in the last few days to present details about the precarious state of their balance sheets, a government source told HT on the condition of anonymity.

Private airlines also sought a level-playing field arguing how state-owned Air India enjoys many advantages as it can dig into the government's coffers to fund its way out of a crisis, an option not available to its peers.

India's second-largest airline by passengers carried, Vijay Mallya-led Kingfisher Airlines, had last week announced that it will shut down its low-cost arm Kingfisher Red to cut costs.

The fare monitoring cell of the Directorate General of Civil Aviation is currently analysing the spike in air fares during the festive season after most airlines reported an average 10% hike.

Airlines maintained that high passenger traffic have filled up the low-fare buckets, leaving only costlier options available for later bookings.

Overall revenues for the private domestic airline industry for 2010-11 were estimated at Rs 23,500 crore.

"It is estimated that Indian carriers lost Rs 3,525 crore by selling seats at levels 15% below cost," an informal note presented by private airlines to the finance ministry, a copy of which is available to HT, read.

During the first half of the current fiscal year (April-September 2011), domestic airlines incurred a loss of Rs 2,900 crore, the note said.

"If this trend continues, the full-year loss will be well over Rs 4,700 crore for the industry." the note said.