But IA insiders indicated that the management is in a dilemma about the increase in aviation turbine fuel (ATF) prices. By a conservative estimate, the national carrier's ATF bill will go up from Rs 700 crore last fiscal to Rs 920 crore during the current fiscal provided there is no further fall in rupee.

The IA management seems to have three options. First, to hike the fare and pass on the burden to the passengers, as Jet has done. In that case, IA would be able to maintain a modest net profit for the fourth consecutive year.

After incurring losses for years, IA reported a Rs 47.27 crore net profit in 1997-98, which fell to Rs 13.12 crore in 1998-99 and again went up to Rs 45.27 crore in 1999-00. The net profit for the current fiscal had been estimated at Rs 25 crore.

The second option is to spare passengers and take some initiatives to offset the hike. In that case, the company's bottomline would be under tremendous pressure and the risk involved is very high as the company may again be in the red.

The third option is a combination of a modest fare hike and some initiatives to attract passengers.

"No doubt the ATF price hike will have a very negative impact on our bottomline. However, being a public sector company, passing this burden on passengers can only be the last option. Therefore, the management is studying all other options, and taking a calculated risk," a senior official told The Financial Express.

"Instead of crying over the ATF price hike, we are expecting a higher passenger load during the winter session till the end of the current fiscal. With IA having decided to hold the price line, we are attracting 1,200 to 1,300 passengers more per day as the average daily carriage crossed the 20,000 mark," he added.

IA's seat factor has gone up from 60.3 per cent in September to 63.7 per cent in October following the fare hike by Jet Airways, and to around 70 per cent on an average during the first 14 days of the current month. On some days in November, the seat factor was more than 70 per cent.