Kingfisher Airlines announces fare cut between 21 to 65 per cent

Kingfisher Airlines has announced a reduction its its air fares ranging between 21 and 65 per cent across various routes on its network with starting 1 January, 2009.

In a statement to the press, the airline said that this fare cut was "consistent with Kingfisher Airlines' mission to aggressively pursue increase in market share and to deliver India's only five star experience at highly competitive fares". The airlines said that it would also offer significant discounts on its traditional corporate customer base, and its frequent flier programme King Club would include incentives and rewards such as free overseas travel on its recently launched international routes.

In the statement, Dr Vijay Mallya, CEO and chairman of Kingfisher Airlines said that the drop in the prices of aviation turbine fuel, commonly known as jet fuel, was the reason such "consumer-benefitting initiatives" were possible, and that they would also "stimulate the industry".

Reports suggested that the overall average reduction in fares of Kingfisher Airlines was around 20 per cent. Recently, Jet Airways and national carrier Air India had also reduced their basic fares by an average of 50 per cent and 40 per cent respectively. Additionally, Jet Airways announced a handful of special fares for its international routes including Singapore, Hong Kong, Bangkok, London and New York.

Though domestic fares have been marketed well, airlines have opted to retain the artificial floor limit of fuel surcharges at between Rs2,500 and Rs3,000.

The price of aviation turbine fuel (ATF) makes up around 50 per cent or more of an airline's costs. These have seen a reduction of around 60 per cent as against their record high levels in August 2008, and currently they make up around 40 per cent of an airline's costs.

Reports quoted analysts as saying that the airlines are aware that aggressive pricing would be detrimental to their interests, and are hence opting to retain the fuel surcharge to protect their long-term interests while stimulating the market through fare cuts.