Says Indian Airlines' Deputy Public Relations Manager, A K Vashist: "The fare hike would have been effective from October, but the Ministry has turned this down."

Sources say that a livid Aviation Secretary, P V Jayakrishnan was forced to issue a directive last Friday to stop the fare hike since Indian Airlines had not taken any clearance from the Ministry. The Secretary cited the fact that even hikes in taxi fares were cleared by the Government and upbraided Indian Airlines for the decision.

The directive also added that the fare hike ``would mean a bonanza for profit making private airlines including Jet Airways. The Secretary also mentioned the fact that no private airline hadapproached the Government seeking a fare hike. The directive made the point that the Ministry and its nominees on the board of the national carrier ``remained unconvinced'' about the reasons cited for the increase.

When contacted by The Indian Express Jayakrishnan refused to comment.

P C Sen joint chairman in the Indian Airlines, had said to the Ministry that they had taken a decision to hike fares since Indian Airlines faced a loss of Rs four crore a week if they were not effected.

The letter was sent to the Secretary on Monday. By Friday the Ministry had moved in and stalled the hike.

The issue has all the portents of blowing up in a serious row according to Ministry officials since Union Minister Ananth Kumar has told the Secretary to ``rein in Indian Airlines''

Kumar is believed to have conveyed ``sharp displeasure'' at ``Indian Airlines' arbitrary decision'' and told the Secretary to ``convey that the Government found the decision intolerable since we (Aviation Ministry) still exerciseeffective administrative control''.

Sen wrote that Indian Airlines faced a loss of Rs 306 crore per annum out of which Rs 214 crore was caused due to domestic operations. The fare hikes according to Sen were being effected due to operational reasons and not to add to the bottom-line of Indian Airlines.

Sen wanted the Government to give the go-ahead for the hike immediately for the catch-all operational reasons. Sources say that Indian Airlines in defence of its decision maintained that the Air Corporation Repeal Act allowed it to increase fares without seeking clearance from the Government.

This position led to heated exchanges at the Mumbai meeting of the joint-board held this week.