Fuel prices reduce, air fares do not

Thanks to the global reduction in crude oil prices, and reductions in Customs duty (in response to desperate pleas by airlines), Aviation Turbine Fuel (ATF) prices in India, have retreated back to earlier levels of 8 months ago.

Today, ATF is priced almost the same as in March 2008, but air fares show no sign of retreating. Airlines had almost doubled their fuel surcharges in June 2008, citing massive increases in ATF prices by the oil companies.

Yet, despite the prices reducing drastically, airlines are following a dangerously greedy business strategy, and refusing to reduce their fuel surcharges. Not only is this impacting the volume of passengers, but it increasingly alienating airlines’ supporters, passengers and politicians’, alike.

Instead of abating, the short-sighted approach by airlines, is on the increase. From November 1, 2008, all airlines removed the 5% commission they used to pay to travel agents, but have kept the savings, instead of passing it on to our customers. Naturally, the travel agents, are levying additional service charges on the tickets they sell to us. It is a perfectly acceptable situation till this point, but in addition to this indirect fare increase, Jet, Air-India, and Kingfisher are imposing a “transaction fee” on all ticket sales sold by THEM!!!!. In fact the transaction fee will be levied even on refunds or changes!!!

Across the globe, companies are going all out to retain their customers. Airlines in India, seem to be taking their customers and supporters for granted, adding new unreasonable fees, and hoarding their cost savings, instead of sharing it with their customers.

It is little wonder, why passengers continue to desert the skies and take to trains and buses.

A rollback in the fuel surcharges to March levels, and non-imposition of the ridiculous transaction fees, will bring the passengers back to the skies and improve load factors, which will increase the airlines’ incomes. Keep the fares high and passenger numbers will just continue to dwindle, and that, my friends, is the download spiral to oblivion.

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 …