Air Deccan Manages To Keep Prices Low

S. Nithya Kamakshi - Chennai

With the recent surge in price of aviation turbine fuel (ATF), Air Deccan has increased its fares by 10 to 15 per cent with effect from the second week of October. However, according to Capt. G R Gopinath, managing director, Air Deccan, the popular Re 1 and Rs 500 fares will remain unaffected. "The volatile oil prices have affected everybody and we have suffered too. The prices are going up right now. But we hope it will reach a peak and then will reduce. We plan to increase our fares which are above Rs 3,000 by 10 to 15 per cent," said Capt. Gopinath, who was speaking on the occasion of the announcement of selling the airline's tickets on indiatimes website. The fares on its ATR aircraft will also remain unaffected.

Capt. Gopinath said the decision to leave the Re 1 and Rs 500 tickets out of the fare hike had been taken because they served a specific purpose. Nearly 40 per cent of the seats are reserved for low fares.

This would be the first time the airline has raised its fares because of the hike in aviation fuel. The spiralling cost of ATF, which went up by more than Rs 1,700 per kilolitre this month compared to September, has forced several airlines to restructure their fares. Jet Airways and Air Sahara had earlier announced a 10 per cent across-the-board hike from October 14. The low-cost airline SpiceJet had also announced a "temporary fuel surcharge" varying from Rs 200 to Rs 400 on bookings made from October 9. The state-owned Indian Airlines was also quoted to hike its fares.

While the airlines were paying about Rs 36,700 per kilolitre in September this year, the price peaked to Rs 38,400 this month. ATF accounts for 30 per cent to 35 per cent of the operating cost of most major airlines.

Capt. Gopinath further added that Air Deccan had requested the Government to allow private airlines to hedge fuel from abroad, in line with the Government's decision to allow airlines to hedge ATF from international market. "We have got a clearance from the Civil Aviation Ministry and the issue has been taken up with the Finance Ministry. It should also be approved by the Reserve Bank of India. We hope a positive decision will come soon," he continued. "We normally hedge when the prices are low. And we are hoping for a good time to do that."

Giving information on the airline’s future plans, Capt. Gopinath said that the airline was aiming to fly four million passengers this fiscal year, which is nearly 25 per cent of the total number of passengers who flew last year in the domestic sector. The airline is also proposing to add 10 aircraft this year. "This fiscal, we have already signed for five more A-320s and the same number of ATRs. Right now, we have seven Airbus aircraft," said Gopinath. He denied that the airline had filed its prospectus with SEBI regarding its IPO. However, he said the airline will go for an IPO sometime early next year. The airline also plans to allow passengers to book tickets from their mobile phones.