Tuesday, 4 September 2012

Subsidy in disguise? Air India charges more on LTC tickets

If you are a Central government employee wanting to buy an Air India flight ticket to avail of your leave travel concession (LTC), you could be forking out anything between 50 to 140 per cent more than the normal price offered to other passengers.
In what could be seen as another subsidy to the cash-strapped national carrier, the Air India website has opened a special section for LTC tickets to government servants. Employees can also book it through authorised agents such as state-owned tourism and travel companies like Ashok Travel and Tours, Balmer and Lawrie and IRCTC (Indian Railway Catering and Tourism Corp).
For government employees, especially Grade A and B employees who are entitled to fly on their holidays, it does not matter as the money is reimbursed by the government. So, they are unlikely to go in for cheaper fares. Also there are some advantages — the cancellation charges for LTC passengers is only Rs 200, compared to Rs 300 to Rs 1,500 in the normal ticketing system. Moreover, about 20 seats are reserved for LTC passengers on any flight, so availability is not an issue.
For example, an economy class ticket on a Delhi-Mumbai Air India flight on October 15 will cost a regular buyer Rs 5,505, while the same ticket under LTC will be 135 per cent higher at Rs 12,962.
The cost of an LTC seat is based on the date of issue of the ticket rather than the date of travel, said a travel agent of an authorised travel agency that sells Air India tickets.
An economy class seat in Air India flight is categorised under 14 classes. E class has the lowest fare and Yankee class has the highest. H class, at tenth , which is under the LTC-80 category, is allotted to Central government employees.
Considering that there are over 300 domestic flights daily in operation, effectively 6,000 seats are on offer under the LTC category on a daily basis. Central government employees are reimbursed the amount at most equivalent to H class. “If the employee has bought a ticket of a class lower than H class, the cancellation amount ranges from Rs 500 to Rs 1,500. Hence, in case of indecisiveness of the date of journey, availing of LTC under H class is preferred over any other lower class,” another authorised agent said.
An official in the railways ministry which competes with airlines for a share of the LTC pie said: “With LTC tickets of H class so highly priced, Air India is milking the government to maximum as it is assured that the central government will finance it. It is another form of subsidy for Air India.”
Over a year ago, the rules were that it was mandatory for a central government employee to buy tickets only under H class to claim LTC even if other classes were cheaper.
However, an order was issued by the ministry of finance, amending the rules on March 4, 2011 under which “reimbursement of air fare lower than LTC-80 air fare of Air India will also be admissible for journeys performed by Air India under LTC as the intention is to ensure that the LTC claim should not in any case, exceed LTC-80 fare of Air India.”
An email sent to Air India did not elicit any answer till press time.
However, an Air India executive who did not want to be identified, said: “It is the choice of the consumer and all the ministries have accepted the published fares."
According to the LTC rule, the central government employee and his family is entitled for travel twice in four years through any medium as in through railways, air, roadways and ship. The list of eligible people includes the government servant’s wife or husband and two surviving unmarried children or step children, wholly dependent on him or her. One ticket can be availed to travel home and the other to travel to any part of India.
According to a central government employee: “Apart from that, the employee has to initially pay the money for the ticket from his own pocket. The time period of reimbursement also varies from a few months to a year or so.”
COSTING THE EXCHEQUER
Route, Date & Flight
Fares (Rs)
DELHI-MUMBAI (15-Oct)
Air India-LTC
12,962
Air India-Normal
5,505
GoAir, SpiceJet, IndiGo (LCCs)
5,215
KOLKATA-MUMBAI (15-Oct)
Air India-LTC
12,550
Air India-Normal
5,371
SpiceJet, IndiGo (LCCs)
4,977
DELHI-KOLKATA (15-Sep)
Air India-LTC
13,077
Air India- Normal
7,761
IndiGo, SpiceJet (LCCs)
7,450
MUMBAI-CHENNAI (05-Sep)
Air India-LTC
12,017
Air India-Normal
8,002
SpiceJet, IndiGo (LCCs)
7,722
Fares of various routes as on September 3, 2012; LTC- Leave travel concession
Source: Air India website and travel portals



Air India hikes fares, others to follow suit

NEW DELHI: Following last Friday's steep 7.6% hike in aviation turbine fuel (ATF) prices, airlines have started hiking fares. Air India on Monday hiked fuel surcharge by Rs 150 on domestic flights of upto 1,000 km and by Rs 250 for longer ones. It hiked fuel surcharge for international flights by $15 (Rs 840) for a one-way ticket and by $30 (Rs 1,680) for return tickets with immediate effect.
Other airlines say they will follow suit and hike fares shortly as such announcements are always staggered to avoid the charge of cartelization. The impact on domestic flights is going to be much more as the hike in price for domestic ATF is to the tune of over 16% in past two months and jet fuel prices are at an all time high currently. "We have no option but to hike fares to recover this additional cost burden from passengers," said an airline official.
As the latest fuel surcharge hike is coming at a time when fares are already very high, airport operators fear that the sharp fall in domestic flyers could get even worse. This July saw a 10% fall in domestic flyers over same period last year and the International Air Transport Association says India is witnessing the sharpest fall globally in air travel within a country.

Air India Express to operate more flights to Gulf

KOCHI, SEPT 3: 
Air India Express will operate additional flights from four centres — Mangalore, Kochi, Kozhikode and Thiruvanthapuram — to destinations in the Gulf starting September 17 until October 27.
A spokesperson for the carrier said around 130 additional flights will clear the vacation crowd from India to the Gulf.
From September 17 to October 27, IX 343/344 will operate on the Kozhikode – Dubai — Kozhikode route on all Sundays; and IX 363/348 on Kozhikode — Abu Dhabi — Kozhikode route on all Thursdays.
It said that IX 381/382 will operate daily on Kozhikode — Dammam — Kozhikode route.
On Mondays and Saturdays, IX 419/4522 will operate on the Kochi — Abu Dhabi — Kochi route. It said that IX 4199/452 will operate on Kochi — Dubai — Kochi route on all Wednesdays, Fridays and Sundays.
According to the release, IX 537/5388 will operate on Thiruvanthapuram — Abu Dhabi —Thiruvanthapuram route on all Fridays; and IX 5377/538 on Thiruvanthapuram — Dubai —Thiruvanthapuram route on all Thursdays and Saturdays. It said that IX 535/536 will operate on Thiruvanthapuram — Sharjah — Thiruvanthapuram route on all Mondays and Wednesdays.
There will be IX 817/818 on Mangalore — Abu Dhabi — Muscat — Mangalore route on all Saturdays; and IX 383/384 on Mangalore — Dubai — Mangalore route on all Mondays, the release added.
http://www.thehindubusinessline.com/industry-and-economy/logistics/article3854301.ece?homepage=true&ref=wl_home

Emirates keen to operate more flights into India

NEW DELHI, SEPT 3: 
Dubai-based Emirates Airlines is keen on operating more flights into India, saying the move will result in direct as well as indirect benefits for the country. The expansion, if approved, could be through both higher seat allocation and additional points of service.
In a presentation here on Monday, Will Lofberg, Senior Manager, Public and Environment Affairs, said allowing Emirates to operate 80,000 seats a week into India or carry 6.16 million passengers annually would lead to a direct contribution to the Indian economy of $363 million and have a multiplier effect of $720 million.
The economic impact assessment has been brought out in a study Emirates in India: Assessment of economic impact and regional benefits. The study has been conducted by the National Council of Applied Economic Research and sponsored by Emirates .
Similarly, allowing Emirates to operate 60,000 seats a week would allow it to carry 5.03 million passengers annually and directly contribute $296 million to the Indian economy with a multiplier impact of $644 million.

DEFENDS STUDY

At the moment, the airline is allowed to operate 54,200 seats a week into India. The airline points out that since 2008, it has not been allowed to increase the number of seats offered between India and Dubai.
Emirates officials felt there was nothing wrong in sponsoring the study.
During the presentation, it was stated that Emirates’ India operations carried 45 per cent of passengers between 10 Indian cities and Dubai. The remaining 55 per cent of passenger traffic was carried between Indian airports and points beyond Dubai.
Indian carriers are said to be opposed to allowing any more rights to international carriers to operate more flights into India. They argue that foreign airlines carry passengers not only to their home country but also to third countries from their home base.
http://www.thehindubusinessline.com/industry-and-economy/logistics/article3854877.ece?ref=wl_banking