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Bid goodbye to cheap flights

Jet, JetLite, Spicejet hike fares, others set to follow as airlines seek to recover costs, reports Lalatendu Mishra.

india Updated: May 02, 2008 00:32 IST
Lalatendu Mishra

The honeymoon with cheap airfares seems to be over. For the first time in the last two years, some airlines have decided to increase full fares by 10 per cent to keep pace with the rising jet fuel prices.

What does this mean? One’s travel bill shoots up by 10 per cent if your ticket is booked on full fare since many travellers take recourse to last-minute flying. Add to it the latest round of fuel surcharge, the travel cost can shoot up by around 20 per cent.

An increase of 10 per cent implies that one will have to pay at least Rs 1000 more if one travels by Jet Airways full fare economy class on the Mumbai-Delhi sector. The current full fare is Rs 10,570 (excluding taxes and surcharges.) As of now, Jet Airways, JetLite and SpiceJet have increased the fuel surcharge. Others are expected to follow suit by Friday.

Jet Airways and JetLite have so far gone for a hike in full fares. Budget carriers, which bank on demand-supply dynamics for pricing tickets, are also expected to raise fares to improve bottomlines. “We do not have any capacity to bear further rise in oil prices. We expect fares to go up further,” said Ajay Singh, director, SpiceJet.

Remember, if one books in advance, one can still bag cheaper tickets. According to experts, airlines are now planning to sell more full fare tickets rather than cheap ones to improve their revenues. According to estimates, airlines have incurred a cumulative loss of Rs 4,000 crore in the last 12 months due to focus on luring passengers by offering air tickets below cost.

Come May 3, long distance (more than 750 kms) fuel surcharge will go up Rs 350 per ticket while the fuel surcharge for short distance routes will go up by Rs 150. Over the past year, one witnessed fuel surcharges going up from Rs 750 a ticket to the present Rs 2,000.

With international crude oil prices hitting a record high of $120 a barrel, and state-owned oil companies raising jet fuel prices by nearly 9 per cent to Rs 60,468 in Mumbai and Rs 58,387 in Delhi for 1,000 litres of jet fuel, airlines have decided to pass on a part of the extra outgo by increasing the surcharge.

Contrary to common perception, fuel surcharges do not recover all the expenses incurred on fuel bills. “It takes care of a portion of the extra outgo on fuel but we have to bear some losses to keep fares low due to intense competition among airlines. The jet fuel price increase since March 08 has increased the fuel bill of all domestic airlines in India by $700 million (Rs 2,800 crore) on an annualized basis,” said jet Airways CEO Wolfgang Prock-Schauer.