Praful expects drop in airfare by mid-December

On the back drop of lessening taxes on Aviation Turbine Fuel (ATF), the Indian domestic carriers are likely to reduce airfares in a couple of months, said Civil Aviation Minister Praful Patel in an Interview with IANS.

‘The government has reduced the 5% basic custom duty on ATF and Oil Marketing Companies (OMCs) have also reduced the ATF cost by 17% last month. Thus, the domestic airline firms are under pressure to pass this benefit of reduction to the passengers who are facing huge load crisis factor,’ said Patel.

“The domestic airlines may reduce the airfare by 10% by mid-December,” expressed Patel by adding that ‘fares are the question of demand and supply’.

However, experts believe that the domestic aviation sector bearing a total loss of Rs 10,000-crore is not willing to reduce the airfare because it is not only suffering from the higher ATF cost that is 70% higher in India compared to other countries, but also all the airlines are facing severe load crisis that has been slipped down to 45% from last year’s 70%. Now domestic passengers are moving towards train from air travelling.

On the question of higher prices of ATF, the minister accepted this fact but also added that it was not due the policy of Oil and Natural Gas Ministry.

“As aviation minister it is my duty to save my sector and resolve a crisis,” said Praful. He expected to come out from this problem after examining the suggestions of an expert panel set up by Prime Minister Manmohan Singh in July to look at all issues, including high cost of fuel.

However, since last three months the ATF prices has been slowed down in phased manner and current ATF prices is 20% less as against last month’s of prices.

In the response of airline industries’ dues to oil companies, Aviation Minister said that sector has a cumulative dues of about Rs 2,500-2,800 crore (Rs 25-Rs 28 billion) and it has been decided in a meeting to clear all by March, 2009, said minister.

Favouring the proposed alliance between two leading private players Jet Airways and Kingfisher airlines, Patel said, “The alliance has not killed fair competition. It is still there. I don't see this alliance as a negative development.”