Mumbai/New Delhi, June 17

Domestic air fares could rise by as much as 10-12 per cent in the short term with airlines looking to cut capacity to offset their losses due to the current low realisation and rising aviation turbine fuel (ATF) costs.

The President, Travel Agents Association of India, Mr C.V. Prasad, told Business Line, the base fare is likely to be fixed at a minimum level which would be almost double of what it is currently. “The base fare of Rs 200 will no more be there, instead they are likely to be fixed between Rs 500 and Rs 1,000 and with the fuel surcharge etc there is likely to be an increase of 10 to 12 per cent in the fares across the board."

He added the airlines till last year had a passenger capacity utilisation of 73 per cent, which fell to the current levels of 63 per cent after the hike in fuel prices. “Now, about 10 to 15 per cent of the capacity is likely to be withdrawn enabling them to achieve load factors of about 80 per cent.”

Sources indicated that airlines are likely to reduce capacity on their loss-making routes to step up yields. These routes, mostly short haul-flights, would be Chennai-Bangalore, Hyderabad-Bangalore and Jaipur-Ahmedabad. A senior official of a low-cost carrier said this would help increase the load factors by 2-3 per cent.

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