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March 12, 2012

Flying in India set to become more expensive

MUMBAI: Get ready to pay more when you fly. A steep increase in airport charges, carbon emission tax and a predicted jump in jet fuel prices are likely to drive fares up and make air tickets expensive. Industry experts believe passengers will pay at least 20-30% more on air travel in the coming months.

Officials at Mumbai airport said a rise in airport charges for both Delhi and Mumbai was imminent. The proposal to raise the charges is pending with Airport Economic Regulatory Authority (AERA) and will be cleared in the next couple of months.

"The proposed charges for Delhi airport are 800% more than the prevailing rates, while Mumbai wants a hike of 500%," a senior airport official said. "Though airlines are protesting against such a steep hike, they are not likely to get respite from the situation. Hence, the cost of operation will have to be borne by the flyers,'' he added. Many airlines have threatened to withdraw operations if there is a quantum jump in charges.
Officials said jet fuel prices were also likely to spurt in the next two months. "Jet fuel is a component that has been causing increase in fares for a while now. Another hike, though predicted, will only add to the increasing fares," a Fort-based travel agent said. Rajesh Rateria, MD of Cirrus Travels, said south-east Asian carriers had already raised fares by 10% on this count.

Travel to Europe may also get dearer if a controversial carbon emission tax is imposed by the European Union.

Although, India had refused to comply with the move impose carbon emission tax for now, the situation may change with growing global concern for environment. "If India accepts the carbon tax, flyers will have to pay more on air-tickets on Europe-based carriers. The exact rates will be known once the policy is implemented," Rateria said.

Travel experts said that these factors would collectively account for a 20% hike in domestic fares and a 25-30% jump in international fares. "The jet fuel price will result in a hike of 3-4%. The major addition would come from the hike in airport usage charges and carbon emission tax. Hence, flyers would be paying at least 20% more than the current price," said Pradip Lulla fromCupid travels. Lulla said that the tax component in tickets is already going high with Emirates increasing $10 on certain sectors to Europe. "Other airlines would soon follow. No airline has the capacity to absorb the increase in rates and the flyer will have to bear the burden," Lulla said.

WHAT MAY CAUSE FARE HIKE

Mumbai and Delhi airports have asked for a hike of 500% and 800% on the airport charges levied on airlines.

Jet fuel hike may spike the fares by 3-4%.

Carbon emission tax proposed by the European Union may result in increase of fares for European carriers.

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