Kingfisher, Jet mull fare cuts, likely by January

Mumbai: India's two largest private airlines, Kingfisher and Jet may move towards another round of fare cuts soon after reducing fuel surcharge by Rs550 per ticket last month. It is being given to understand that both airlines may be mulling reducing basic fares by as much as Rs600 per ticket in January of the coming year.

With the latest round of price cuts in aviation turbine fuel (ATF), announced on Monday, bringing down the price of jet fuel to less than half the levels that prevailed in August this year, government is now bringing pressure to bear on carriers to reduce ticket prices and provide a fillip to the sluggish airline industry.  

According to industry estimates, ATF accounts for nearly 45% of an airline's operating costs.

In this regard Kingfisher officials may meet as early as Saturday (20 December) to discuss the quantum of cuts that they may like to offer. With the airline being in an operational alliance with Jet Airways, it is likely that Jet too may take a similar decision.

The aviation ministry is mounting pressure on these two airlines as it wants them to pass on the benefits of a series of measures announced by the government to bail out the beleaguered industry.

It is learnt that the aviation secretary has already met Air India, Jet and Kingfisher chiefs and asked them to take appropriate measures aimed at bringing down fares.

Air traffic numbers hit a record low this November with 3 million passengers as compared to 3.8 million in the same month last year. This represents a substantial drop of 21.3%.

While Jet has reported its worst quarterly performance in more than three years with a loss of Rs384 crore for the September quarter, against a net profit of Rs28 crore in the year-ago period, Kingfisher has widened its net loss by 90% Rs483.2 crore.