Thursday, October 6 2005 20:15 Hrs (IST) - World Time -

New Delhi: In a bid to meet ballooning fuel bills, leading airlines Jet Airways and Air Sahara today (Oct 6, 2005) announced an across-the-board hike of ten per cent in their domestic fares from October 14 in all classes of travel.

Public sector Indian Airlines is yet to take a decision in this regard, but sources indicated that they too might follow suit soon.

In a related development, Civil Aviation Minister Praful Patel said the Government was considering allowing all airlines to hedge on fuel prices in a bid to stem the burgeoning bills of Aviation Turbine Fuel (ATF).

Flag carrier Air-India has already been allowed to hedge on ten per cent of the ATF it lifts from abroad with effect from January next year.

"We may consider permitting other airlines to hedge in future. The fuel prices are continuously rising", Patel told reporters here in reply to questions.

Due to the rising crude prices, several global carriers have imposed fuel surcharges to offset the rise in fuel bill, which is expected to reach a whopping 97 billion US dollars in the near future.

The total fuel bill in 2003 stood at 44 billion dollars, according to estimates of the International Air Transport Association (IATA).

Earlier, a Jet Airways spokesperson said in Mumbai that the premier private airline would increase fares on domestic routes by 10 per cent from October 14.

In addition to increase in normal economy class and business class INR fares, there would be a proportionate increase in other fares like promotional, excursion and check fares.

Tickets issued on or after October 14 will be at revised rates, irrespective of the date of travel, the Jet Airways spokesperson said.

An Air Sahara spokesperson also told sources that the airline would follow the same pattern and hike fares by ten per cent from the same day.

On hedging of ATF prices by Air-India, sources said it would help the Indian flagship to hedge against any upward movement in the fuel prices.

AI, which lifts almost 70 per cent of its ATF requirements from abroad where the prices are cheaper than in India primarily due to sales taxes imposed on it, has in the recent past been affected by fuel price hike.

The state-owned airline was paying about 114 cents per gallon in 2003-04, which rose to 173.14 cents the following year and has peaked at 220 cents a gallon in 2005-06. Fuel as a percentage of total costs went up from 21 per cent in 2003-04 to almost 29 per cent in 2004-05.

Had the fuel bill not increased in leaps and bounds, Air-India would have made a profit of over Rs 450 crore after adjusting fuel surcharges in 2004-05, the sources said.

Globally, the rising oil prices have adversely affected the growth in international passenger traffic, which slowed down in the recent past, with the lowest rate being recorded in Europe and Asia-Pacific, according to IATA.