Express Industry wats the airlines to stop charging fuel surcharges
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.