EICI - Airlines should allow market forces to rule

Neelam Mathews

Dec 17, 2012

Express Industry Council of India (EICI), the apex industry body of Express companies, says domestic airlines should stop charging fuel surcharge immediately and allow market forces to operate. It has alleged that domestic airlines have formed a price cartel that is exploiting the levy of fuel surcharge (FSC) on cargo by not applying a rational pricing mechanism.

Aerospace Diary could not confirm this and invites airlines to give their point of view.

The EICI says in the "last four years, there has been substantial hike in fuel surcharge, which has not been commensurate to the highly volatile Air Turbine Fuel (ATF) prices. With effect from November 19, 2012, domestic airlines have further increased the FSC on cargo by Rs. 2/kg in spite of a marked drop in ATF prices."

“What has been surprising is that all airlines have chosen to increase the FSC by the same amount more or less at the same time. This has led us to believe that this action has been taken in concert,” said Vijay Kumar, Chief Operating Officer, EICI.

One would think the EICI should be in discussions with the ministry on this.

A chart has been provided to us by the EICI. The data is in the descending order of ATF prices.

Airlines		Indigo	Spice Jet	Jet Airways	Air India	King Fisher
Month	ATF Rs./KL	FSC RS./KL	FSC RS./KL	FSC     RS./KL	FSC RS./KL	FSC    RS./KL
16-Sep-12	73710.7	13	13	13	11	13
1-Sep-12	72281.9	11	11	11	9	11
1-Aug-08	71028.3	5	5	6	5	5
1-Oct-12	70516	13	13	13	11	_
1-Jun-08	69227.1	5	5	5	5	5
16-Oct-12	68398.8	13	13	13	11	_
16-Nov-12	68397.5	15	15	15	13	_
16-May-12	67047	9	10	10	9	10
16-Jun-12	62410	11	11	11	9	11
16-Nov-11	62310.3	7	9	10	5	9