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Rediff.com  » Business » Fly cheaper in November-December

Fly cheaper in November-December

By Surajeet Das Gupta & P R Sanjai
September 22, 2006 06:16 IST
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You could be paying far less for air tickets this November or December, thanks to plummeting oil prices, the key cost in running an airline. Domestic airlines, especially budget carriers, are planning to pass on the reduction in jet fuel prices. Fares could fall 6-8 per cent as a result.

Ajay Singh, director, SpiceJet said, "If fuel prices remain stable, we expect air fares to come down in November or December. Our savings on cost could be 6-7 per cent." Fuel constitutes over 47 per cent of an airline's overall costs.

GR Gopinath, Air Deccan's managing director, said every 10 per cent fall in fuel prices translated into a 4 per cent reduction in costs.

"We expect to pass on some of the reduction in jet fuel prices, once the companies give us a new price, even though our yields are under pressure," he said. Added GoAir Chief Commercial Officer Raj Halve, "We will definitely pass on the benefits to passengers on jet fuel."

Crude oil prices have nose-dived to $60 per barrel from a recent high of $78, a 22 per cent decline. With the decline in crude oil prices, the cost of jet fuel is also expected to come down. Asked about lowering airfares, Jet Airways CEO Wolfgang Prock-Schauer said the airline would take a decision only after the next price revision by oil companies.

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Surajeet Das Gupta & P R Sanjai
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