Budget airlines may cut fares to spur travel

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Updated: 18/08/2008 | 08:35 PM IST

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Jyotsana Ravishankar and Harris Usman

Monday, August 18, 2008 (New Delhi)

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High fares but fewer passengers is not a recipe that’s working for budget airlines. With crude prices coming off 22 per cent from their peak to around $115 a barrel, some airlines are now ready for fare cuts.

While commenting on reduction in airfares, Ajay Singh, Director of SpiceJet, said the low cost airlines may revise airfares downward by 15 per cent from September 1.

Jet has put out apex fares which offer cheaper tickets during a fixed time period on key routes of Delhi and Mumbai. Apart from this weekend packages are also on offer.

Jet's Chairman Naresh Goyal in an interview to NDTV in Dubai said that the budget concept is quite limited as costs have surged too much to be ignored.

According to Goyal, the airlines are in a mess. He also said that you can serve passengers but only on recovering costs which airlines are slowly learning now.

If crude prices continue to remain low chances are high that oil companies will marginally cut ATF prices at the end of the month.

But for now even though the debate continues whether low cost carriers are really low cost, the good news is you can finally take the flight with a smaller pinch on the pocket.