Air India working on slashing fares by 10-12 pct

Sources said the cut in Air India’s fares on the domestic sector could range between 10 and 12 per cent, but the official refused to confirm.

Steps could also be taken to slash fuel surcharge and tinker with the congestion surcharge, the sources said, adding that the fare reduction could be made effective in December itself.

Renewing his pitch for making air travel cheaper, Civil Aviation Minister Praful Patel had last week asked all the carriers to slash fares in response to the government’s support to the aviation industry to meet the financial crisis. On its part, the government has asked oil marketing PSUs to extend credit period and allow airlines to clear their dues amounting to about Rs 3,000 crore by March next year. It has also abolished the five per cent customs duty on ATF, even as the jet fuel prices were brought down considerably.

Regarding Air India, Patel had said, “We have never dictated what Air India should do in terms of pricing or routes, or capacity. But AI, as a responsible government carrier, will also understand that if the oil prices are coming down, so should the fares.”

The rate of air traffic growth in the recent weeks, which is considered the peak travel season, has been on a much lower level than last year.

The number of flights by all airlines each week fell from 10,922 in March to 9,635 in October, according to latest official figures. There has also been a 30-32 per cent fall in passenger traffic respectively at Delhi and Mumbai airports — the two busiest.

It is yet to be seen whether the full-frill private carriers are to follow suit, though the Aviation Minister was optimistic that air fares would come down by December.

Patel’s appeal to the airlines came in the presence of Kingfisher-promoter Vijay Mallya and Jet Airways chief Naresh Goyal, who had clearly said he would not like to “close down” his company.

Though Goyal agreed with the Minister on the need to lower airfares, both he and Mallya pointed toward the “enormous” losses being suffered by the airline industry. “We will do whatever the government wants us to do, provided we are profitable,” Goyal had then said.

Jet Airways, which has posted losses to the tune of Rs 384 crore in the second quarter of the current financial year, has asked senior cadre in the airline, including pilots, to take a pay-cut between 5 per cent and 20 per cent.

Two months ago, it had announced retrenchment of 1,900 temporary staff but had withdrawn the decision after the government made it plain that lay-offs should not be carried out by any industry.

Mallya also elaborated on the causes of the financial downturn experienced by the industry, saying high taxes on ATF and weakening of rupee against US dollar were major reasons for the losses and mounting debts of the airlines.