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No more adding fuel to the fare

india Updated: Jan 01, 2009 23:05 IST

Airlines are flying into better weather in the New Year with jet fuel prices falling to well under a half of their August peak. The lower fares announced by Jet Airways and Air India at the fag end of 2008 portend more good news for fliers as the year progresses. Crude oil is racing downhill and aviation fuel prices fell another 6 per cent within two days of the airlines pulling down fares by a jaw-dropping 82 per cent on select sectors.

A fortnight from now, fuel, which eats up close to half an airline's running expense, should cost even less. Air India is slated to slash ticket prices on more sectors and Kingfisher Airlines, which completes India's flying formation, is expected to do its bit for the good times. The airlines, of course, are testing the waters after a bruising year. Fares have been lowered on sectors where planes are flying empty. Air India's cuts apply to around a third of the domestic destinations it flies to. Jet Airways has been bolder, it will charge less on roughly two out of every three sectors. Indian carriers can cart 150,000 people a day and they flew full on Christmas weekend 2007. A year later every third seat went empty. Getting these fliers back is top priority for Messrs Naresh Goyal, Vijay Mallya and Raghu Menon. Take the busiest route, for instance. The three airlines have among them 42 flights from Mumbai to Delhi and back every day. If these planes fly three-fourths full, minus the frills each seat breaks even with cost at Rs 2,700. Vital to this equation, however, is the number of empty seats, which had risen to an alarming 60 per cent. This on a sector that brings in every second rupee of business for Indian airlines.

At the margin, ferrying a person by air can be as cheap as by rail or road — the break even price of Rs 2 per km is a shade above the cost of air-conditioned train travel. The 24 million Indians who flew in 2007 realised this, as did airlines targeting the 19 million people who take a train every day. For most of 2008 oil prices hijacked the dream of Indian aviators, but this could be the point where the industry takes stock, and moves forward with a surer step.