Air-India hiked its fares by five per cent across the board, Civil Aviation Minister Shahnawaz Hussain said on Tuesday.

"Air-India fares will be increased by five per cent from April 16. Apart from the fare hike, passengers will also have to pay $10 coupon as per the decision of the Internatioal Air Transport Asssociation," Hussain told PTI.

The coupon rate of $10 would become effective from April 1, he said.

Indian Airlines and Jet Airways have already raised their respective fare by 15 per cent.

In another major development on the war-risk insurance issue, Air-India and Indian Airlines have bagged a waiver from
the insurance companies, which had earlier decided to impose a hefty premia on all flights operating from Kuwait and the war zone in West Asia, the minister said.

The war-risk insurance, which was to be as high as about Rs 50 lakh (Rs 5 million) per flight, would have imposed a tremendous burden on the Indian carriers, he said, but added that both the carriers would still have to bear the burden of flying empty to Kuwait and bringing the Indians working there back to the country.

He said Rs 3,000 worth of additional amount was being imposed on the flights to and from Kuwait to meet the loss to
both the airlines.

The insurance outgo per flight would have been much higher than the income generated by each flight, officials said,
adding that the airlines were not in any way operating from the war zone around Iraq.

The insurance firms were also told that the airlines had already planned out operations to avoid the war zone through
alternative route plans. New India Assurance Company, which insures Air-India and Indian Airlines flights, agreed to grant the waiver, the officials said.

In any case, they said an insurance surcharge was being imposed on flights from and to Kuwait at the rate of 2.5 per
cent since November last in anticipation of the US-led war in Iraq.