The parliamentary panel attached to the ministry of civil aviation on Tuesday said it was time airlines passed on the benefit of the sharp cut in aviation fuel (ATF) prices to its customers.
Despite a 50 per cent reduction in aviation fuel prices and seven successive price cuts since September, airlines are yet to pass on the benefits to consumers. ATF prices had touched a peak of Rs 71,028 per kiloliter in August.
“Pricing will now be demand and market driven and I see a fare correction by airlines in January,” Mark Martin, senior consultant with consultancy firm KPMG said.
Most airlines except full-fare carrier Kingfisher have reduced fares by Rs 300 to 500 per ticket, but the parliamentary panel feels they could do more.
Kingfisher has said it would reduce fares only when ATF is brought under the declared goods regime, which attract only 4 per cent sales tax.
Sector specialist and chief executive officer of Centre for Asia Pacific Aviation, Kapil Kaul feels airlines should go in for capacity cuts and “intelligent pricing” to tide over the crisis.