The Hindu Business Line : AI's budget airline fares to be 25% lower than market rates

AIR India is likely to stick with its decision to charge fares that are 25 per cent lower than market prices for the planned budget airline to be launched in April 2005.Indian expatriates in the Gulf have demanded that the fares should be much lower as other regional carriers are ready to operate budget flights on the Indo-Gulf sector at 50 per cent lower than market fares.

Air India's Regional Director, Gulf, Mr S. Talwar, told Business Line that the budget airline was on schedule to be launched from April 2005.

The operations would start off with flights from the Gulf to Thiruvananthapuram, Kochi and Kozhikode. The possibility of operating flights to Kuala Lumpur and Singapore at a later date was also under study. Mr Talwar stressed that the fares would be maintained at 25 per cent lower than the market price on the sector.

"It is not likely that we will go lower than that as of now. In any case, fares on the Gulf-India sector have dropped by almost 50 per cent in the past five to six years," he maintained.

The Sharjah-based budget airline Air Arabia, which is awaiting clearance from the Indian civil aviation authorities to operate flights to Kerala, is ready to charge 50 per cent of the market fares on the route.

Meanwhile, passengers on the UAE-India sector are to pay more for their tickets, as the Board of Airline Representatives at a meeting in Dubai decided to implement new fuel surcharge from November 10, in the wake of high oil prices, Mr Talwar said.

Passengers will have to pay an extra Dh 20 per ticket, leading to a total surcharge of Dh 120 for one-way and Dh 240 for return tickets. "The hike in charges could adversely affect business for airlines in the coming period," the official said.

Air India has no plans to increase frequencies or add destinations on the India-Gulf sector in the near future, Mr Talwar said. "The Gulf region has touched a plateau. It is still the highest revenue earner, region wise, for Air India, but in recent years, revenue is dropping due to lower yields. The airline is making a strong shift in focus to the West, particularly the UK and US, as there is a large Indian expatriate community there which we are targeting," he said.

The recent increase in operations to London and Los Angeles with the use of additional leased aircraft is part of this move, he added.

Plans are also on to refurbish all the A310s operated by Air India on the Indo-Gulf sector, the official said.

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