Airlines opt for differential pricing after fuel price rise

Airlines opt for differential pricing after fuel price rise
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First Published: Tue, Apr 01 2008. 11 59 PM IST
Updated: Tue, Apr 01 2008. 11 59 PM IST
New Delhi/ Mumbai: Air passengers in India are likely to pay Rs350 more each time they go on a journey of more than an hour-and-a-half in the summer months ahead as domestic airlines prepare to impose differential pricing on short- and medium-haul routes following a steep rise in aviation fuel prices.
Instead of a flat fuel surcharge of Rs1,650 applicable on every ticket across the board in India, most airlines now plan to increase the levy by Rs150 for short-haul sectors such as Bangalore-Mumbai that fall under 750km while those beyond that threshold as in Delhi-Mumbai will cost Rs350 more.
The enhanced fuel surcharge comes at a time when air passenger growth rates are slowing in the past few months and jet fuel prices touched an all-time high as oil companies hiked prices by about 14% from 1 April. This jump makes jet fuel cost nearly 75% more than prices in early 2005. At New Delhi, prices shot up by Rs6,260.44 per kilolitre to Rs53,309.30 compared with Rs30,608.39 a kilolitre in April 2005, according to Indian Oil Corp. Ltd, the largest jet fuel retailer in the country.
With the latest rise in fuel costs, said Bruce Ashby, chief executive officer of InterGlobe General Aviation Pvt. Ltd-run low-fare carrier IndiGo, “our overall costs went up 5% in a month,” he added. The country’s largest airline by passengers carried, Jet Airways (India) Ltd, has decided to pass the hike in a differential manner effective 7 April, its chief executive Wolfgang Prock-Schauer said. Kingfisher Airlines Ltd and SpiceJet Ltd, too, said they are most likely to follow a similar differential model, while Paramount Airways Ltd is considering a Rs150-200 increase.
tarun.s@livemint.com
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First Published: Tue, Apr 01 2008. 11 59 PM IST