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Jet Airways slashes fares across its domestic sectors effective today

According to a PTI report, Jet Airways and Kingfisher Airlines yesterday announced reduction in fares following the steep fall in Aviation Turbine Fuel (ATF) prices. While Jet Airways said that it was reducing its fares ranging from 15-40 per cent across most of the domestic sectors effective from today, Kingfisher Airlines said that it will reduce its fares across its network effective January 1, 2009. The decision was taken due to Civil Aviation Minister Praful Patel repeatedly asking airlines to pass on the benefit of the reduced ATF prices to passengers. Air India is also likely to announce reduction in fares on its domestic routes effective mid-January, 2009.

“Kingfisher Airlines will begin the New Year on an aggressive note by slashing fares on its network,” informed Vijay Mallya, Chairman, Kingfisher Airlines. However, Mallya did not specify the quantum by which fares will be reduced. He further added that the current low price of ATF allows Kingfisher Airlines to pursue an opportunity to significantly increase its market share by offering fine five-star flying experience at reduced fares.

Earlier, Mallya had stated that the airline will reduce fares only after the government classifies ATF as ‘declared goods’ category. The airline across the board is currently demanding the government to classify ATF in the declared goods category. Under the declared goods category, there will be a uniform four per cent sales tax on air fuel across the country. The proposal is presently submitted before the parliament. However, several state governments are likely to oppose the uniform taxation as it will cause them revenue loss. Currently, sales tax varies from four per cent to 32 per cent and accounts for over 35 per cent of airlines’ operational cost. Over the last four months, there has been a sharp decline in ATF prices. While some air carriers earlier this month reduced the fuel surcharge between Rs 200 and Rs 400.

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