Kingfisher to slash fares January 1

PTI reports, Kingfisher Airlines, has said that it would effect fare cut across its network from January 1.

Without specifying the quantum of reduction in fares, in a statement today, Kingfisher Airlines Chairman, Dr. Vijay Mallya said

Kingfisher Airlines will begin the New Year on an aggressive note by slashing fares on its network,

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.

Bangalore Aviation readers will recall, until now, Kingfisher, and its alliance partner Jet Airways, had been saying, fares would be cut only after the government classifies ATF in the Declared Goods category. The proposal of the Civil Aviation ministry is before the Parliament.

This long standing demand of airlines across the board, will ensure there will be a uniform four per cent sales tax on air fuel across the country, unlike the present, where sales taxes range from four per cent to 32 per cent, depending on the state, and accounts for over 35 per cent of airlines' operational costs.

However, several state governments oppose the uniform taxation as it would cause revenue loss to them.

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.

Mallya's decision could have its inspiration in the fact that Low Cost Carrier (LCC) IndiGo recently beat both Kingfisher Airlines and its LCC Kingfisher Red, to take third place in market share.

There is no doubt, the losses at the airline are significant. Just two weeks ago, there was news about four Kingfisher aircraft being de-registered. Doubts are rising on the impact of these losses on Dr. Mallya or his core alcoholic beverages business.

December 29, update.

The Times of India is reporting the fare reductions will be in the range of 10% and 15%. Jet Airways is expected to cut its fares by a similar amount, and Air India will follow suit. The LCCs IndiGo, SpiceJet, and Kingfisher Red are also working on the fares.