Airlines may hike fares

The increase in prices of jet fuel by about nine per cent would put an additional burden of Rs 550 crore (Rs 5.5 billion) on national carrier Indian and the airline has asked the government to consider levying a fuel surcharge on air travel or hiking fares.

As per the budget estimates, the cost on aviation turbine fuel for Indian airlines and its subsidiary, Alliance Air, went up to Rs 2,300 crore (Rs 23 billion) in 2005-06 and was expected to touch about Rs 2,450 crore (Rs 24.5 billion) this financial year, airline sources said.

Maintaining that the frequent increase in ATF prices was adversely impacting the profitability of the company, they said a presentation has been made to the Civil Aviation Ministry urging it to allow either a fare hike or imposition of fuel surcharge.

Jet Airways, SpiceJet and other airlines have already announced their decision to impose or increase the levels of fuel surcharge, raising the fares. In the global arena too, all major carriers have imposed a surcharge on airfares.

The national carrier and other airlines have been demanding that ATF be categorised as 'Declared Goods' under the Central Sales Tax like other items to cap the sales tax on jet fuel at four per cent.

For the second consecutive month, public sector oil firms on Monday hiked ATF prices by over 8.6 per cent. For international airlines, which do not pay local levies, the hike would be between $54-58 dollars per kilolitres. The earlier increase was effected on April 1.