Courier rates in the country may be hiked by 35-40 per cent within 15 days following imposition of 67 per cent on-board courier rates by domestic airlines, the apex organisation of courier companies said on Wednesday.

Addressing a press conference in New Delhi, Tushar Jani, chairman of the Express Industry Council, said that if courier rates were not increased, the industry would suffer huge losses which would retard its growth, leading to closure of operations.

"We have written a letter to the civil aviation ministry, but we are yet to get a response. If we do not get any response within the next 10-15 days, then we may be forced to pass on the hike in courier baggage rates to the customers," Jani said.

He said the companies were able to contain any increase in rates till now by increasing volumes and cutting costs.

Major domestic airlines like Indian Airlines, Jet Airways and Air Sahara have increased courier baggage rates by about 60 per cent from June 16, 2003.

This was in addition to the 7 per cent increase effected in January this year following the Gulf War which has led to a total increase of 67 per cent in last six months.

The members of the Express Industry Council represent 80-85 per cent of the total express courier business in the country and about 95 per cent of the overseas business.

Stating that the rate hike as unjustified, the former chairman of the council Sandip Shah lamented that it was effected only for the courier industry and not on the postal services.

He said the justification by the airlines about increasing losses and rise in aviation turbine fuel price was unwarranted as loss of traffic due to introduction of Apex fares cannot be passed on to courier industry. He also said that ATF prices had come down in the last two months.

Shah said the courier industry contributes about Rs 180 crore (Rs 1.80 billion) annually to the total revenue of the airlines.

The Rs 3,500 crore (Rs 35 billion) courier industry was currently growing at 15-20 per cent annually which had largely helped the companies to absorb any hike in baggage rates by airlines, he said.

However, the yields of the industry, which acts as a catalyst to trade and commerce, have gone down by 30 per cent, while the costs have increased by 30 per cent, Shah added.

Of the total revenue of Rs 3,500 crore generated by the courier industry, Rs 1,000 crore (Rs 10 billion) comes from the organized players and remaining from the unorganised, semi-organised and EMS SpeedPost sectors.