Get ready for another fare hike

Fuel prices continue to spiral, airlines to impose a third surcharge by next week

BY A CORRESPONDENT
August 6, 2006

Continuous rise in fuel prices have resulted in the third air fare hike in only four months, with airlines across the country committing to a third fuel surcharge from early next week onwards. Airlines that have already confirmed the hike include Jet Airways, Indian, Air Sahara, and even low-cost carriers like Air Deccan and SpiceJet.

Jet and Sahara have already announced an additional fuel surcharge of Rs.150 in the domestic sectors, leading to a cumulative surcharge amount of Rs.650 in each sector. Meanwhile, Indian is likely to announce its decision during the weekend. International fares will carry a surcharge of $14.

The announcements follow Indian Oil Corporation (India's largest aviation turbine fuel – ATF – producer) figures of a 2.4 per cent hike in jet fuel prices. The new price is now at an all-time high of Rs.47,691.

Indian chairman V.Trivedi confirmed, "We will shortly increase the fuel surcharge as ATF prices have gone up again." In addition to the surcharge, the carrier will also be hedging ATF from the international market. Air Sahara president Alok Sharma said in a similar vein, "The hike in ATF prices has become unbearable now and we have decided to impose a fuel surcharge of Rs 650 on all our domestic flights. This will help us offset some of the cost increase."

Jet officials said, ""This increase in surcharge has been necessitated due to the continuing escalation in aviation turbine fuel (ATF) prices. This is the second consecutive revision carried out in fuel surcharge in the last two months mirroring the hike in ATF prices."

Low-cost carrier SpiceJet has also announced that it will impose an additional surcharge if the rest of the industry is going to, and Air Deccan MD GR Gopinath said, "We are awaiting some inputs on fuel costs. We are looking at a fare hike and will take a decision in a day or two." It is likely that Kingfisher and GoAir will follow suit.

While the surcharge on Indian tickets is estimated at Rs 150, some airlines may impose a surcharge of Rs.200. The hike is also applicable for discount and excursion fares.