Airlines get relief from Government but make passengers pay Transaction Fee

The battered India airline companies received a lifeline from the government on October 31.

The 5% Customs duty on Aviation Turbine Fuel (ATF) has removed. In addition the government controlled oil marketing companies have announced a price reduction of Rs. 6,000 per kilolitre on ATF.

These two steps, will result in an about 17% reduction in prices, but predictably, airlines have chosen to hoard the price reductions to buttress their shattered financials, and say it is too early to say whether the drop can be passed on to customers in the form of lower air fares.

Adding insult to injury, airlines will force, their customers to start paying the “transaction fee”on air tickets from November 1, 2008. The fee will hike domestic fares by up to Rs. 500 and international travel by up to Rs. 10,000 a ticket. This fee will be payable even on refund tickets.

Please see the tags “Transaction Fee” for articles on this subject.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

Check Also

In new strategy Etihad invests in Darwin Airlines, re-brands it Etihad Regional

by Devesh Agarwal Etihad Airways, the national carrier of the United Arab Emirates, today announced …

No comments

  1. Is it fair for airlines to make passengers pay a transaction fee even when no travel agents are used and they tickets are booked directly on the airline website? I am beginning to lose all sympathy for them.

  2. It is absolutely unfair.

    I think the airlines are going overboard in the efforts to redress their balance sheets.

    They are saving 5% commission they used to pay the travel agents, AND then making us passengers pay this transaction fee.

    Despite a 38% reduction in ATF prices, the “fuel surcharge” remains at its high.

  3. I think the airlines thoroughly deserve what they are getting (in terms of losses & brickbats). They want to hoard all the price-cuts in ATF without passing on the benefits to the travelleres…but they fail to realise that market economics works differently. On top, they are crying hoarse when international carriers are offering better deals to the international traveller. The Indian carriers are afraid of entry of these international carriers into the domestic sector & are leaving no stone unturned to prevent it. However, the earlier these airlines start passing on the benefits to passengers, the sooner their woos will get relieved.