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Home > Business > Business Headline > Report

Foreign airlines may hike fares

Rumi Dutta & Freny Patel | March 21, 2003 12:17 IST

International air fares are likely to go up further, with a $5-10 per coupon surcharge expected to be loaded soon.

The war risk premium has been raised to 0.175 per cent from 0.05 per cent, depending on the destination, with effect from March 18. Airlines will pass this on to passengers.

Most foreign carriers had earlier slapped on a fuel surcharge, followed by an increase in the security surcharge.

Executives at most of the international carriers confirmed that a further hike in fares could not be ruled out. However, they are awaiting a communication from their headquarters.

"It is too early to comment. But it is most likely that any increase in costs will be passed on to the consumer keeping in mind the revenue loss that an airline has to face during a war," said the country head of a leading international airline operating in India.

Officials also said fares were going to be hiked under various heads of surcharge, but the basic fares were likely to remain unchanged due to tax implications.

The latest surcharge has been provoked by the fact that the international reinsurance industry has identified 24 war-sensitive zones, including Afghanistan, Argentina, Columbia, Indonesia, Egypt, Nigeria, Pakistan, Sri Lanka and Zimbabwe.

Flights to and from these areas will invite a heavy surcharge since airlines will have to bear a war risk premium.

The London War Risk Committee has asked insurance companies to exercise discretion while extending war cover to the African coast and the Gulf region.

This came into effect from March 18, before the completion of the 48-hour ultimatum. Should the companies decline to do so, aircraft could be grounded.

However, senior officials at New India Assurance said that would not be the case and that no policies had been cancelled till date.


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