The country’s leading private air-carrier, Kingfisher Airlines, has said that it would effect fare cut across its network from January 1.
“Kingfisher Airlines will begin the New Year on an aggressive note by slashing fares on its network,” Kingfisher Airlines Chairman Vijaya Mallya said in a statement here today. He, however, did not specify the quantum by which fares would come down.
The current low prices of Air Turbine Fuel (ATF) allows Kingfisher to pursue an opportunity to significantly increase market share by offering the fine five star flying experience at reduced fares, he said.
Earlier, Kingfisher had said that it would effect fare cut only after the government classifies ATF in the Declared Goods category. Another private airline, Jet Airways, had also taken a similar decision on the issue.
The airlines across the board are demanding from the government to classify ATF in the declared goods category. Under the declared goods category, there will be a uniform four per cent sales tax on air fuel across the country.
The proposal is now before Parliament. However, several state governments are likely to oppose the uniform taxation as it would cause revenue loss to them. Now, the sales tax varies from four per cent to 32 per cent, and accounts for over 35 per cent of airlines’ operational cost.
Over the last four months, there has been a sharp decline in ATF prices. While some air carriers earlier this month reduced the fuel surcharge between Rs 200 and Rs 400, they did not touch the basic fare.