Jet Airways cuts fares by 15-40 per cent, others to follow in New Year

Airlines across the spectrum are expected to offer fare reductions by January 2009, in a bid to woo back passengers lost in the oil swell.
 
While Jet Airways said it was reducing air fares by 15-40 per cent across all domestic sectors from tomorrow, Kingfisher Airlines said it would reduce fares across its network from 1 January and Singapore Airlines has made a hefty 52 per cent cut in fares for flights linking India.

''Jet Airways is reducing basic fares ranging from 15-40 per cent across most of the domestic flights with effect from tomorrow,'' a company spokesperson said.

Kingfisher said it plans to slash fares in the range of 15-20 per cent – a drop of Rs500 to Rs1,000 - from 1 January.

''Kingfisher Airlines will begin the New Year on an aggressive note by slashing fares on its network,'' chairman Vijay Mallya said.

State-run Indian Airlines also said it will announce substantial reductions in fares by January.

National flag carrier Air India is also expected announce a reduction in base fares on its domestic routes from the middle of January, official sources said.

Sources said Air India has already been working on reducing the fares and could make an announcement in the first week of January. The revised fares will be effective from the middle of the month.

"In view of the slackening demand in post-peak season and continued decline in fuel prices, Air India will be adjusting domestic fares downwards on various sectors shortly," an Air India spokesperson said.

Low-cost carriers such as IndiGo and SpiceJet are also working on attractive schemes and there is a possibility of a 5 to 10 per cent reduction in air fares in January.

Civil aviation minister Praful Patel, meanwhile, has been pressing airlines to pass on the benefit of cheap fuel to consumers.

Airlines have been reluctant to cut fares as the union cabinet is yet to clear the proposal for uniform sales tax rates, which would bring down sales tax from an average of 32 per cent at various airports to a uniform 4 per cent.

Sales tax varies from four per cent to 32 per cent, and accounts for over 35 per cent of operational costs of airlines.

Airlines have also been demanding that aviation turbine fuel (ATF) be brought under the "declared goods" category.

Jet-JetLite combined had a market share of 26.7 per cent in November,  while Kingfisher (along with Air Deccan) had a share of 25 per cent. Air India had 18 per cent of the domestic market, while IndiGo-led the Low-cost carrier segment with 14.7 per cent. SpiceJet had 11 per cent.