NEW DELHI, Oct 6: Domestic air travel will be costlier from next week with Indian Airlines set to hike fares by 11.5%. The board of directors of IA gave formal approval to the hike at a meeting held in the Capital on Monday.

It is expected that the IA fare increase will signal similar hikes by private airlines such as Jet Airways and Sahara Airlines.

Chairman and managing director of Indian Airlines PC Sen said: "IA will raise fares by 11.5 per cent from next week. The fare increase is to meet the increase in cost of inputs of the airline."

IA's fare increase will result in a revenue accrual of Rs 196 crore."This amount is just enough to offset increase in input prices. The decision to increase fares was not made to shore-up IA's bottomline, as speculated by the press," said Sen.

The main areas of rise in input costs, as cited by an IA communique, are aircraft maintenance and repairs, passenger amenities, exchange rate fluctuations, wage revisions and increase in hotel tariffs and rent.The IA communique said that its input costs have increased by Rs 261 crore over the past year, of which cost of domestic operations amounts to Rs 196 crore.

Sen denied that IA had been under pressure from private airlines to hike fares. He also said that the board of directors, in its meeting on Monday, had favoured a higher increase in fares.

"The board of directors wanted IA to increase fares by 15 per cent. But we are keeping the fare hike pegged strictly to increase in input costs," he said.

Incidentally, IA has differentiated the fare increase for short-haul and long-haul routes. The fares will go up by 14 per cent for routes up to 700 km and by 10.5 per cent for routes which are more than 700 km.

For the northeast, which is usually spared during fare hikes, the fare increase is 10.5 per cent.

IA did not indicate the exact revision in dollar fares. The company has just said that adequate notice will be given to the travel and tour industry regarding increase in dollar fares.

The IA communique stressed the point that even after the latest increase in fares, domestic air travel fares remain the lowest in India as compared to other parts of the world.

This is the eighth year in a row that IA has managed to increase fares. In August last year, IA fares went up by 16.5 per cent following an increase in aviation turbine fuel (ATF) prices.

This year, ATF was spared the oil price hike owing to intense lobbying by IA's parent ministry of civil aviation. The ministry is reportedly unhappy with IA's decision to hike fares by 11.5 per cent as it favoured a more modest fare hike.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.