Airfares should fall in two months: Praful Patel (Interview)

New Delhi, Nov 8 (IANS) Despite Indian carriers accumulating losses worth Rs.100 billion ($2.2 billion), Civil Aviation Minister Praful Patel sees fares falling over the next couple of months, even as he promises to resolve the current crisis in the industry.

'The fares will be decided by the ability of the market to pay,' said Patel, who has been vocal about helping the domestic aviation industry, both state-run and private carriers, tide over the situation.

'The fares will come down in about two months. Fares are a question of demand and supply,' Patel said in an interview with IANS.

The minister, a senior leader of the Nationalist Congress Party that is part of the ruling coalition, also sought to brush aside suggestions that the strategic alliance between Kingfisher Airlines and Jet Airways - the two dominant private players - will lead to a cartel.

'The alliance has not killed fair competition. It is still there. I don't see this alliance as a negative development. Cartels cannot rule the roost,' the minister maintained.

Patel said that he had, indeed, intervened to help bail out the aviation sector by trying to resolve the impasse over prices of aviation fuel between airlines and fuel retailers - a move that was criticised by his cabinet colleague, Petroleum Minister Murli Deora.

'The sector has an accumulated loss of Rs.10,000 crore (Rs.100 billion or $2.2 billion). This has to be countered,' he said, adding airline companies will pay their dues concerning aviation fuel by the March deadline.

The ministry has estimated the cumulative dues of the airlines industry to the oil companies at about Rs.2,500-2,800 crore (Rs.25-Rs.28 billion). In a meeting last month, the airlines said they will clear the same over the next six months.

'As aviation minister it is my duty to save my sector and resolve a crisis. That is what I have done. My job is to give people more choices for air travel and more connectivity. Have I not done that?'

He was also of the opinion that prices of aviation fuel in India was 70 percent higher than in other countries, although he also said it was not because of the policies of the petroleum and natural gas ministry.

This had resulted in the government slashing the basic customs duty on aviation fuel, helping oil companies lower the retail price of the commodity by Rs.2,100 per kilolitre.

Patel hopes to resolve the problems faced by the industry after examining the suggestions of an expert panel set up by Prime Minister Manmohan Singh in July to look at all issues, including high cost of fuel.