Get ready to pay more for flying. The Government is “well-disposed” towards a request by private airlines to raise fares. This could happen quite soon.
An internal Government study has shown that domestic fares are much lower in comparison with other countries. A comparison with fares from a decade ago shows that fares have hardly risen.
This study was made after private airlines, troubled by heavy losses, approached the Prime Minister's Office, the Finance Ministry and the Ministry of Civil Aviation early this month.
At the same time, the Airport Economic Regulatory Authority (AERA) is also expected to allow Delhi and Mumbai airports to increase parking and landing charges.
“These charges have been revised just once in the last 11 years. Our cost is increasing, so we approached the regulator,” a DIAL official confirmed.
As the airlines will pass it on, it could further raise fares.
“There are a lot of reasons to increase fares,” a senior Government official said. However, he refused to comment about the quantum of increase. Even the airlines have not indicated about the quantum of hike, he added.
He said that although airlines are free to raise fares, with the fare monitoring mechanism operating in the Directorate General of Civil Aviation (DGCA) they felt they should seek Government approval before deciding.
The private airlines apparently told the Government that during the first half of the current fiscal they incurred a loss of Rs 2,900 crore. If this trend continues, the annual loss could touch Rs 4,700 crore, they added.
With increasing costs, airlines' losses are mounting. A review of the three listed scheduled airlines on Bombay Stock Exchange showed that all of them are in the red. The Government had set up a fare monitoring mechanism last year when there were complaints about arbitrarily fare hikes. There were also allegations of cartelisation.
After this, all the airlines were asked last December to publish a schedule of fares for advance booking in each bucket at the beginning of the month. This tariff schedule is now available on the Web site of various domestic airlines.