Air India Airlines

Air India cuts fuel surcharge on domestic fares by Rs 400 news : National carrier Air-India has announced a Rs400 reduction in fuel surcharge for all domestic flights effective 2 December, following the reduction in the prices of aircraft turbine fuel (ATF).

Air India currently slaps a fuel surcharge of Rs. 2,350 for sectors below 750 km and Rs. 3,100 for sectors over 750 km per ticket. In June, the airline had increased the surcharge by Rs. 300 for sectors less than 750 km and Rs550 for longer flights. State-run oil companies had cut ATF prices on 15 November by over 12 per cent to a 14-month low. ATF prices are down over Rs. 5,580 per km at Rs 38,163.23 per km in Delhi from the September 2007 levels.

Civil aviation minister Praful Patel had asked domestic Air India Airlines to cut fares now that ATF prices have eased. The company expects its market share to increase during the peak winter season, in view of reduction in fuel surcharge. Private airline said they would continue to watch the situation before slashing passenger fares. However, private operators would be forced to cut fares once the national carrier cuts its fares. ATF prices, which account for nearly 35 per cent of an airline's operating costs, have dropped by nearly 50 per cent since hitting a high of Rs. 73,673.56 a kilolitre in August.

The state-owned airline had said in August that it expected to report a loss of Rs. 2,000 crore for the financial year ending March as rising fares and competition had reduced demand. The National Aviation Corp of India Ltd, which runs the airline, plans to raise $1 billion to buy 21 Airbus aircraft by 2011. Air India had in 2005 placed an order for 111 aircraft, 68 from Boeing and 43 from Airbus worth Rs 60,000 crore then. It has so far raised over Rs12, 000 crore and added 38 new generation aircraft to its fleet.