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  • Category: Miscellaneous

    Why aren't air ticket prices coming down?

    I always think about this issue. But only today, our Hon'ble Aviation Minister, Mr. Hardeep Singh Puri, has tweeted on this subject. The Hon'ble Aviation Minister has stated that the Aviation Turbine Fuel constitutes about 40% of the cost of airline operations.

    The Hon'ble Minister has further stated that some opposition-ruled states like West Bengal, Maharashtra and Delhi impose massive 25%+ VAT on the Aviation Turbine Fuel, while some BJP-ruled states like Uttar Pradesh, Nagaland and the Union Territory of Jammu & Kashmir charge only 1% on this Fuel.

    Is this the only reason behind costly air tickets, or are there some other reasons also?

    ISC Members may kindly opine.
  • #756071
    The states are over jealous in earning through VAT and it does not mind imposing hefty tax on such luxuries to which the rich can afford without murmuring. But the difference of 24 percent tax in non BJP states only prove that they are indifferent to center's advice and bent making profit while the sun shines. Shame on such states which has no voice to raise about the increase in prices of commodities also. And I thought like Nano being the less costly car available to the people after Tata take over of Air India, the airline would come up with cheaper traveling experience with low cost budget routes in India and abroad. For the common man thinking of air travel is the dream that would never come true and for the rich they do not mind to shell down any amount provided the comfort is guaranteed with time assurance.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #756079
    Forget about the taxes and let's take a look at the cost of ATF (Aviation Turbine Fuel). The price of ATF is revised every fortnight and on March 16 the increase was very high, more than 18%. If we consider the hike from the beginning of this year it will be found that the rise is close to 50%. In this situation how the price of tickets will come down I do not know. I am sure the states not ruled by the BJP have no role in deciding the price of the fuel. Unless the central government is taking measures to stop the price rise of fuel nothing will change. The behaviour of the opposition parties in our country is the same and no political party is an exception here. Their stance changes when they rule and when they are in opposition. If fuel comes under GST the price hike will be reduced to a great extent but many state governments, including the BJP-ruled states, do not want that because they will lose revenue. When GST is effected there should not be any other taxes in the country. As long as this structure is not rationalised the tussle will remain between the government and opposition-ruled states.

    "Life is easier when you enjoy what you do"

  • #756081
    If the ATF rates are revised time and again, it is because of International turbine fuel rates which has become costly and airplanes has to bear 40 percent of fuel cost to haul the passengers. Some years back we had the services of Vayudoot enlisted for short routes and the demand was more. Gradually that was discontinued. When the train rates are equally more in upper class section, those passengers would love to travel by air if short distance airplane are introduced with customer friendly rates. Like the shuttle services being operated on the trains and bus routes. the air travel should also become more reachable and more friendly to the new users, then only the occupation of seats would be full and the airlines wont incur loss. Mostly the planes are carrying empty seats and thereby increasing the cost of their operations.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #756106
    Supply and demand theory will work here also. There is competition and so companies are trying to attract customers by charging lower prices, That is why when many private operators came the prices were slashed down. When only Air India was operating the rates were so high. Later on, the prices reduced considerably. In that competition, many operators were forced to stop their operations as they are not able to make any profit. Now that much competition is there and so we are seeing some increase in the rates.
    As mentioned by the author the taxes are varying between states. When the taxes are very high automatically the operating costs increase and the operators will be forced to increase the prices. There is a lot of difference even in taxes levied by state governments from state to state. Petrol and Diesel are costing almost Rs11/- less in Karnataka when compared to Andhra and Telangana.
    No operator can continue his business for long if there are no profits.

    always confident

  • #756108
    State VAT is definitely one of the reasons for air tickets being costly. I fully agree that rationalization of VAT is essential across the states in our country otherwise it will create a lot of anomaly and ambiguous situation would arise.
    Coming to the other reasons for increased air tickets one of the prominent one is that there is a good rush of people for booking the air tickets in advance and taking advantage of dynamic fare system. Once the low priced tickets are sold then the passengers have no choice except to book tickets in higher rates or go by train.
    There are many factors which act in a dynamic fare regime and the passenger has to book the ticket in sufficiently advanced time to get a ticket in cheaper rates.

    Knowledge is power.

  • #756128
    Umesh, your suggestion of booking the air ticket in advance so that it would prove to be cheaper travel. But the air travels are decided on the last minute of emergencies and in that case booking in advance not possible.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

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