DAMMAM, 17June — Almost all airlines operating outside the Kingdom have announced an increase in air fare to various destinations effective from July 1, but the national carrier Saudi Arabian Airlines said it would retain its current fares until July 30.
The increase ranges from 20 to 42 percent on various routes and the major rise will be on the subcontinent sector, especially to India where the fares will go up by up to 40 percent.
However, Saudia has announced that its fares to Indian destinations would remain unchanged. Air-India has already released its new fare list effective from July 1. Gulf Air, Emirates, Kuwait Airways, Qatar Airways, PIA, PAL, Air Lanka and several other airlines with services in the sector are expected to release their revised fare list in a few days.
Although passengers call it a fare hike, the move in fact is a readjustment by the airline companies by taking advantage of the peak season. High competition led to massive undercutting in fares on the Indian sector.
The fare to Delhi and Bombay during the lean period is as low as SR1,250 against the IATA price of over SR2,700. It is normal practice for the airlines to reduce the undercutting during the peak period to increase profits.
The industry is nervous about Saudi Arabian Airlines’ decision to continue with the discounted fare to Indian destinations. Airlines which do not operate directly to India are in a quandary because cheaper fares are the main attraction for the passengers opting for their circuitous routes.
As per Air-India fare list, the selling price suggested for a roundtrip economy class ticket to Bombay and Delhi from Dammam has increased to SR1,850 from the current price of SR1,300, an increase of more than 42 percent. Fares to Cochin and Trivandrum will go up from SR1,900 to SR2,700.
Though the fare war is not as stiff as in the Asian sector, competition in the European and the American sectors is from the Eastern European airlines. Asian airlines also offer discounted packages to the Americas and Europe.
For example, a Far Eastern airline is offering a return ticket from Dammam via Bahrain to the United States for just SR1,950.
An agreement signed in Jeddah a few years ago bars European airlines from giving more than 10 percent discount, but there is hardly any airline that follows the rule. On the pretext of corporate packages these airlines also give discounts ranging from 20 to 30 percent.
Air Industry sources say that the situation will never improve unless the airlines themselves put restraints on the slashing of fares.
The airlines, on the other hand, put the blame on the Bahrain factor for the present crisis. They say that the practice by some airlines to take passengers by road to Bahrain and fly them to their respective destinations from there is not only eating into their business but also depriving the Kingdom of millions of riyals in airport tax.
More than 63,000 passengers traveled to Bahrain along the King Fahd Causeway in April — considered to be a lean month — to catch a flight to their final destinations. It translates into an SR3 million loss in revenue for the airport authority in one month alone. During peak periods, this passenger movement crosses the 100,000 mark making the revenue loss much higher.
Foreign airlines blame Saudi Arabian Airlines and the PCA for not taking up the issue with the respective airlines and IATA. They say that unless the situation is rectified, the air industry in the Eastern Province will continue to face a sharp decline.
