AI to offset rising operational costs with 10% hike in basic fares
24 May 2008
New Delhi: State-owned merged entity, Air India, is set to raise basic fares by 10 per cent from Saturday, 24 May according to company officials. The hike will be applicable on both the economy and business classes on domestic flights, officials said.
Officials justified the hike on the grounds that operational costs for the carrier were rising. "The fare-hike is only for basic fares. The increase is about 10 per cent. The decision was taken very recently and after much thought," an Air India official said.
The hike comes on the back of an increase in fuel surcharge earlier this month by airlines following a rise in the prices of aviation turbine fuel.
Operational costs for carriers are mounting in tandem with fleet and route expansions. Excessive rates of aviation turbine fuel, which accounts for about 45 per cent of the operating costs of airlines, are impacting on costs of tickets for travellers.
Falling load factors is a another problem for carriers, including Air India. According to airline officials,
with airlines adding aircraft rapidly to their fleet there is now an increased capacity to carry passengers on routes.
Falling load factors are an inevitable result.