Millennium Post

Air fare hike unlikely, despite crisis, say experts

The lockout at Kingfisher Airlines following a flash strike by its employees will not lead to a hike in air fares, airlines and aviation experts said. 'The reduction in seats by KFA had anyways been factored in by competing airlines during the last two quarters. So we do not expect across-the-board increase in fares,' Amber Dubey, partner and head, aviation, at consulting firm KPMG said.

Dubey said some flights where the airline was operating with its depleted fleet may be marginally impacted.

'The fare hikes may be restricted to the few routes that KFA was operating with its depleted fleet.'

Other airlines like Air India said fares would remain stable as the carriers had taken out discount schemes at the onset of the festive season.

'Kingfisher was already operating on a very minimum capacity. The last minute fares may be affected, but not short to medium-term bookings,' said a senior Air India official.

The airlines will also be deterred by the aviation regulator keenly following fare trends through its air fares intelligence unit.

The directorate general of civil aviation [DGCA] had warned airlines against engaging in predatory pricing following strikes.

Sharan Lillaney, sectoral analyst for Angel Brokings, however, said the trend of reducing capacity may hamper passenger traffic growth in the country which has seen four consecutive months of decline.

'Kingfisher has been constantly reducing capacity and now they only have 10 operational aircraft. No other [airline] is adding capacity as fast as Kingfisher is reducing it, so we expect the passenger traffic growth to be flat even in the festive season,' Lillaney said.

Domestic air passenger traffic fell 3.70 per cent for the fourth straight month in August, which stood at 43.69 lakh from 45.37 lakh travellers in July. The trend started in May during which the traffic came down 0.87 per cent and stood at 54.48 lakh from 54.96 lakh in the corresponding month of 2011. June recorded a substantial fall of 3.84 per cent at 51.08 lakh from 53.12 lakh in the like month of 2011.    
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