Airfares hit record high as carriers hike fuel surcharge
Sangam Prasain, The Kathmandu Post, 06 June 2018
Domestic airfares reached a record high after carriers jacked up the fuel surcharge in line with increased aviation fuel prices. The Airline Operators Association of Nepal (AOAN) on Tuesday gave the go-ahead to its members to hike ticket prices to reflect higher fuel prices.
However, the increased airfares are unlikely to put a dent in travellers’ wallets immediately. Airlines said they rarely have to pay the full fare with an intense price war going on following the end of the travel season.
According to carriers, domestic passenger movement drops steeply during the monsoon season. The June-August period also coincides with the off-peak season in the tourism industry.
Last Saturday, state-owned oil monopoly Nepal Oil Corporation (NOC) jacked up aviation fuel prices sold to domestic carriers by Rs5 per litre to a two-year high of Rs100 per litre.
In response to the fuel price hike, airlines decided to increase the fuel surcharge. The government controls the price of a plane ticket and airlines are not allowed to increase the airfare, but they are permitted to revise the surcharge if fuel prices fluctuate by at least Rs4 per litre.
In the latest increase, the fuel surcharge that is added on to the cost of an plane ticket has been raised from Rs45 to Rs220, depending on the distance, following the approval of the Civil Aviation Authority of Nepal (Caan).
Following the revision, the normal fare on a flight from Kathmandu to Dhangadhi, the longest domestic route, will cost Rs12,870, including Rs4,415 fuel surcharge and Rs200 airport tax. A ticket on the shortest flight, Kathmandu-Simara, has gone up to Rs3,170, including Rs900 fuel surcharge and Rs200 airport tax.
“Although the airfare is high, it has not affected the travel budget due to the ongoing price war,” said Prajwol Thapa, chief of marketing and sales at Simrik Airlines. “Travellers can easily get tickets on a flight from Kathmandu to Dhangadhi at half the normal fare,” he said. “The fare war has intensified due to low travel demand. Normally, travel demand drops during the monsoon season. This is also the off-season for tourism.”
On Monday, the cheapest flight to Biratnagar dropped to a year’s low of Rs2,500, compared to the normal airfare of Rs7,450. Airlines have released many seats on Wednesday’s flights to Biratnagar for Rs3,000 each.
“The price war is likely to put pressure on some airlines having a low capital base,” said an airline official. But it won’t affect big players because they are waiting for the travel rush during upcoming festivals like Dashain, Tihar and Chhath,” he said. “The profits generated during the 15-day sales bonanza in October, which is also Nepal’s peak tourist season, and during another tourist season from March-May, keep airlines afloat the rest of the year.”
The year 2017 was a bumper year for domestic airlines as they recorded a 39.47 percent jump in domestic air passenger movement following the addition of new aircraft to cater to the growing number of air travellers.
Domestic airline companies saw the movement of a record 2.45 million passengers in 2017, as travellers chose to fly rather than drive over bone-jarring national highways, according to Tribhuvan International Airport (TIA). With larger fleets, the Nepali skies saw an average of 255 domestic flight movements per day last year, up from 200 in 2016.
NEW AIRFARE
From Kathmandu Revised Fuel surcharge Revised Airfare
Dhangadhi Rs4,415 Rs12,870
Mountain Rs3,430 Rs11,470
Nepalgunj Rs3,260 Rs10,015
Bhadrapur Rs3,000 Rs9,150
Surkhet Rs3,455 Rs8,675
Biratnagar Rs2,400 Rs7,570
Bhairahawa Rs2,055 Rs6,300
Tumlingtar Rs1,845 Rs6,045
Pokhara Rs1,585 Rs5,030
Janakpur Rs1,285 Rs4,265
Bharatpur Rs1,070 Rs3,655
Simara Rs900 Rs3,170
(Source: AOAN)