Ex­press In­dus­try wats the air­lines to stop charg­ing fuel sur­charges

Cargo Talk - - National News -

Ex­press In­dus­try Coun­cil of In­dia (EICI), the apex in­dus­try body of Ex­press com­pa­nies, 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 for the same.

Ac­cord­ing to EICI find­ings, 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, Ex­press In­dus­try Coun­cil of In­dia. He added, “Though de­signed to mit­i­gate the fuel price volatil­ity, FSC has been used as a pric­ing tool to harm in­ter­ests of ex­press com­pa­nies, freight for­warders and ul­ti­mately the end user.”

In May 2008 when FSC was first in­tro­duced the fuel prices were Rs 69227 and FSC charged by the air­lines was Rs 5/ kg. Dur­ing the re­cent hike, again act­ing in con­cert, on Novem­ber 19th the fuel prices were Rs. 68397 and the FSC charged was Rs 15/Kg. “The av­er­age cost for freight be­tween Mum­bai and New Delhi is Rs. 7/kg. Add FSC and other fixed costs to it and the price would shoot up to Rs 28/kg on an av­er­age. Which other in­dus­try adopts such an opaque pric­ing mech­a­nism?” asked Mr. Ku­mar.

Vi­jay Ku­mar

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