Pay more for flights this festive season

NEW DELHI: Air fares are moving upwards as airlines gear up for the busy travel season which kicks off from October. Jet Airways has decided to increase fares by around Rs 200 from this week, with other airlines, including budget carriers, are expected to follow suit.

As per airline industry estimates, air fares in October are likely to be up 5-10% compared to the slack season — July to September, this year, which will mean an increase in the range of Rs 200-500 in each sector. Interestingly, this comes at a time when jet fuel rates are down around 2%. Aviation turbine fuel accounts for 30-35% of running expenses for airlines.

“We have decided to up fares by Rs 200 across all categories from this week,” Jet CEO Wolfgang Prock-Schauer told ET. There could be further hikes in certain busy sectors depending on the demand in the October-December period, airline executives said.

The Jet Airways scrip went up 7.04% to close at Rs 905.10 on the Bombay Stock Exchange. A senior executive from Kingfisher Airlines confirmed that the airline too is likely to hike its fares. “We will go with the industry,” Kingfisher executive vice-president Hitesh Patel said.

Senior SpiceJet executives said they would be looking at hiking fares in the coming weeks. The country’s largest budget carrier, Air Deccan, pointed out that during this year’s slack season, (July-September), fares are already over 5% up, compared to same period last year.

Fares in some high demand routes are already up, confirmed sources in travel trade. As for the timing of the move, Mr Prock-Schauer said, “We see demand picking up in the coming weeks.”

Airline executives point out competitive pressures have kept the base fares (excluding taxes and surcharges) under check, especially with increase in seat capacity. So even as airlines kept their base fares low, they increased taxes and surcharges from around Rs 750 per ticket to over Rs 1,500.

“Overall fares in October this year should be at similar levels as of last year,” said Kingfisher’s Patel. However, those in travel trade feel that as demand for travel picks up in October, fares in some high demand metro routes will go up further.

“Domestic business class fares in Jet and Kingfisher are already up by 5-10%,” said Balbir Mayal of New Airways, a leading Delhi-based travel agent. This rush to increase fares comes at a time when the industry is in the process of consolidating, cutting down on costs and reducing losses.

The airline industry is estimated to have suffered a $500 million loss in FY07. Analysts expect the merger and consolidation phase to continue for at least couple of more quarters before the industry wipes away the red ink from its balance sheet.