Will Their Be An End To Airfare Hike?
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Will their be an end to airfare hike?

Software Engg

There could be more bad news for air travellers. Domestic airlines may increase air fares by Rs 500-800 per ticket from April as the falling rupee against the dollar is denting their bottom line. Around 30% of an airline’s operational expenses are denominated in dollars.

M Thiagarajan, managing director of Paramount Airways, told ET: "If the dollar continues to appreciate against the rupee, we could increase fares in April." He, however, didn’t specify the quantum of the increase. "We have received feelers from airlines that they could increase domestic fares before the elections. The hike could be around Rs 500 a ticket for low-cost carriers and Rs 800 per ticket for full service airlines," said CEO of a leading Mumbai-based travel agent, who did not wish to be named.

An Air India official declined to comment. Officials of Jet Airways, SpiceJet and IndiGo were not available for comments. A Kingfisher spokesperson said the company did not intend to raise fares.

The rupee fell to a record low on Tuesday. It slipped by as much as 0.5% to an all-time low of 52.185 a dollar before closing at 51.985 in Mumbai. The rupee is the third-worst performer in the past 12 months among the 10 most-traded Asian currencies, with a 22% loss.

South Korea’s won and Indonesia’s rupiah have declined more. Mark Martin, analyst of KPMG, told ET: "There has to be some increase in fares as operating costs have increased manifold in the past two quarters. The on-going rupee depreciation has a direct impact on the balance sheet of an airline."

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