Kingfisher, Jet likely to cut fares by Rs 1,000
The two carriers are under pressure to pass on the benefits of a series of measures announced by the govt to bail out the beleaguered industry. World's Best Airport
By Mithun Roy, ET Bureau |
MUMBAI: India���s two largest private airlines, Kingfisher Airlines and Jet Airways, are likely to cut ticket prices by up to Rs 1,000 on domestic routes by December.
The two carriers are under pressure to act, as the aviation ministry wants them to pass on the benefits of a series of measures announced by the government to bail out the beleaguered industry.
Last week, oil marketing companies had announced a 17% cut in aviation turbine fuel (ATF) prices, while the government reduced customs duty on jet fuel by 5%.
Following this, ATF prices in the metros have come down between Rs 44,965 and Rs 53,663 per kilolitre, a 20% drop from last month. The airlines also received an extension to pay off their fuel dues worth Rs 2,000 crore. However, the customers are yet to get any relief.
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A source in Kingfisher Airlines said the company had held discussions on how to pass on the cost savings to air travellers. He said the fares on metro routes could fall by up to Rs 1,000 if the airline decides to cut the fuel surcharge.A Kingfisher Airlines spokesperson told ET, ���We are monitoring the situation closely. The ATF prices have come down in the current month, and if the airline takes any decision on pricing, the company will make an announcement at the right time.���
A Jet Airways spokesperson said the company would take a decision on fares by December. An industry source, however, said Jet is likely to reduce the fuel surcharge by next month, although the exact quantum of the reduction has not been finalised yet.
The Jet Airways stock shed close to 6% to end at Rs 183 on Thursday on BSE. The Kingfisher stock also lost more than 5% to close at Rs 22.70.
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Airlines had imposed the fuel surcharge on fares following the surge in crude prices. For example, Kingfisher had raised the economy fare on the Mumbai-Delhi route to Rs 6,325, including a fuel surcharge of Rs 3,100, congestion surcharge of Rs 150 and tax of Rs 225. If the airline decides to pass on the benefits of low fuel prices, then the fare on the Mumbai-Delhi route could come down to Rs 5,325, the industry source said.
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Jet and Kingfisher are losing money because of the high jet fuel prices and falling passenger traffic. Jet reported its worst quarterly performance in more than three years, suffering a net loss of Rs 384 crore in the September quarter against a net profit of Rs 28 crore in the year-ago period. Kingfisher reported a 90% increase in its net loss to Rs 483.2 crore.Apart from high ATF prices, airlines have also been hit by falling passenger traffic. Jet���s load factor fell 4.2% in September from August levels, while Kingfisher saw a 2.3% dip. Even low-cost carriers like SpiceJet, Paramount and IndiGo saw their load factors dropping between 6 and 7%. Industry sources said the low-cost carriers are also expected to slash prices shortly.
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