Business Today

Are airlines lying?

Several low-fare carriers are advertising fares as low as Rs 0 (GoAir), but when you book a ticket, you discover that you end up paying Rs 2,350 as fuel surcharge.

     Print Edition: June 1, 2008

Is the infamous Asterisk at it again? Several low-fare carriers are advertising fares as low as Rs 0 (GoAir), but when you book a ticket, you discover that you end up paying Rs 2,350 as fuel surcharge. Along with a passenger service fee (PSF) levied by airports and an “Air Congestion” surcharge, surcharges on low-cost and full-service carriers alike have touched at least Rs 2,775 per ticket since May 1 when the 17.5 per cent increase in fuel surcharges kicked in. However, on short sectors, i.e., for distances of less than 500 km, the fuel surcharge is “only” Rs 1,950.

 Airlines have been raising fuel surcharges ever so often (Jet Airways introduced a fuel surcharge in March 2006). In April itself, they increased surcharges 14 per cent to Rs 2,000. Isn’t that deliberately misleading consumers? In Europe and the US, airlines such as Ryanair have been fined for misleading advertising, but in India, the issue hasn’t been challenged yet.

So, is advertising cheap fares just a gimmick since the cheapest a passenger can fly today is Rs 5,550 for a return fare on a “long” domestic route if the basic fare is zero? Sam Sridharan, Chief Commercial Officer, SpiceJet, does not think so: “I think most consumers are aware that fuel prices are increasing.

Today, fuel accounts for 54 per cent of our costs and it is only fair that I recoup some of that money. You could say that some first-time flyers might be put off by the surcharges, but on long domestic flights, we have not seen a major drop in capacity because the alternative (rail travel) is expensive in terms of time. But we have had to drop flights from some shorter sectors such as Bangalore-Hyderabad and Bangalore-Chennai.”

Increasing fares and a cutback on expansion plans have taken their toll on growth. The last figures published by the Airports Authority of India (AAI) in February 2008 showed domestic passenger growth at 10.2 per cent over the figure for February 2007. A year ago, traffic was growing at 25-35 per cent yearon-year. “A 10 per cent growth rate is still amazing, and we believe that things will improve on the infrastructure front once the new Bangalore airport and the new runway at Delhi start operations,” Sridharan says.

Kushan Mitra

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