Airfares need to rise by 25%, says Jet chief

Jet Airways chairman Naresh Goyal said the strategic alliance forged almost a year ago between his company and Kingfisher Airlines has still not achieved tangible progress, and added that airfares need to rise by 20-25 per cent.

"I can't really tell you when it (strategic alliance) would be fully operational. We have been discussing, but nothing much has been done yet," Goyal told reporters on the sidelines of a function in New Delhi.

Goyal-owned private air-carrier, Jet Airways, and Vijay Mallya-promoted Kingfisher Airlines had sealed a strategic alliance in October last year with a view to curtailing costs after crude prices had shot up astronomically.

Goyal, however, said the two partners have taken certain steps to synergise their operations.

"We have done certain things. We are co-operating in engineering and (sharing) some other facilities in order to improve our bottom lines. We have been looking at how we can improve our cost structures, especially in engineering," he said.

Goyal advocated a 20-25 per cent increase in fares across the board to bridge the gap between input costs and revenue. The industry has been faced with a situation in which the former has been increasing while the latter has been falling. Jet-Kingfisher is alliance yet to gather momentum, he said.

"I think today the industry needs around a 20-25 per cent rise in fares because there is a need to cover costs and also to break-even," Goyal said.

He said the domestic aviation industry is on an average losing Rs 800-900 crore (Rs 8-9 billion) due to a 20-25 per cent gap between revenues and costs, which he attributed to irrational pricing by air-carriers.

"Every one is doing irrational pricing. Every one is selling below prices. We don't want to sell below cost," Goyal said.

However, when asked if he had any plans to hike fares he declined to give specifics, saying, "I don't know."

On the strike-call by Jet Airways pilots union, National Aviator's Guild on September 7, Goyal said the government has already declared the strike as "illegal" and hoped that the pilots would follow the law.

"It (dispute) is with the conciliation officer, who has already termed the proposed strike as illegal. We will do whatever is needed to be done," he said.

On the government's proposed move to allow overseas airlines to invest in India, Goyal said he never opposed the proposal but only felt that domestic entrepreneurs were capable of running the aviation business.

"I have never opposed it (foreign direct investment in domestic airlines). I have only been saying that Indians are capable of running their business," he said.

The present government regulations do not allow foreign airlines to acquire stakes in domestic air-carriers. However, the government has been contemplating for sometime now to relax these rules, which would allow foreign players to pick up to 25 per cent stake in India-based airlines.

Goyal was critical of private airport operators' proposal to the government asking for a 10 per cent hike in airport charges and said that airline operators have already taken up the issue with the civil aviation ministry.