30% Airfare Increase, Ajit Seeks Tax Relief

Wednesday, 13th June 2012 at 02:08am

Domestic airfares rose significantly up to 35% on some carriers following the scarcity of available flights due to Kingfisher's limited schedule and Air India's striking pilots that prevent the airline to operate normally.

The one-way fare via a full-service airline for the Delhi-Mumbai route, for example, has gone up to Rs42,476 on a business class, while an economy fare has skyrocketed to Rs23,385. Budget carriers, on the other hand, have jacked up their tickets too, ranging from Rs8,200 to Rs13,000 on the same route.

Low-cost air travel is no longer relevant with the recent more or less 30% increase in air fares. A special advisor to TAAI (Travel Agents Association of India), Rajji Rai, said that airlines should feel compassion to air travelers and not take advantage even if demand spikes up.

There is an increase of more than 30% on popular holiday destinations such as Srinagar. Even with a record-high one-way fare of Rs14,000 to Rs15,000, the seats to Srinagar are almost always sold out. Meanwhile, flying the Delhi-Chennai route on a one-way ticket via budget carrier now fetches from Rs9,000, from Rs6,000 not so long ago. A leading travel agent commented that air travel is now becoming expensive unless they (air travelers) book tickets early on.

Ajit Singh, the country's Aviation Minister said on Wednesday that he would direct the DGCA (Directorate General of Civil Aviation) to keep a close eye on the fare structures airlines have implemented. Many are wondering if there's anything the DGCA can do to stop the skyrocketing air ticket prices. Some observers say that airlines employ fare structure that is hard for regulators to find anything irregular. Usually they offer a range of fares (e.g. Rs5,000 to Rs60,000) for certain routes, especially high-traffic routes and whenever the ticket price falls within the range, they think it is justifiable. So that if the airline charges Rs50,000 for a one-way ticket from Delhi to Mumbai, it still within the range and therefore justifiable.

The Minister said that the primary culprits of the rising air ticket prices are the Rs 100 service tax cap on a domestic fare and the Rs 500 on an international ticket, and the staggeringly high taxes on jet fuel. Mr. Singh said that the ATF price in India is costlier than in Abu Dhabi, Dubai, Hong Kong, London and Singapore. Jet fuel, on average, accounts nearly half of Indian airlines' total operational cost.

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