The fare increase, undertaken to compensate for the 38 per cent rise in the price of aviation turbine fuel over the past year, could come in the form of a fuel surcharge.

"We are concerned about the increase in ATF prices. All the players in the sector are impacted by this," said Naresh Goyal, chairman, Jet Airways.

According to sources, the Indian Airlines brass made a presentation to Civil Aviation Minister Praful Patel on the impact of ATF prices on the airline's operating expenses (fuel costs comprise 30 per cent of an airline's operating expense) and the need for an increase in fares to compensate for it. Sources also said Indian Airlines would take a final decision on hiking fares in the next few days.

"We are looking into the issue of an increase in fares. A decision on this will be taken after wider consultations," Patel said on Monday.

If airfares are not increased, most airlines could be in financial trouble.

For example, Indian Airlines incurred an additional expense of Rs 224.34 crore (Rs 2.24 billion) in 2002-03 on account of the increase in ATF prices. The total fuel bill of the carrier was Rs 975 crore (Rs 9.75 billion) in 2002-03 against Rs 808.98 crore (Rs 8.09 billion) in the previous year.

Sources also said the government would take a call on the issue only after consultations with the allies and the Left Front.