With declining jet fuel prices, Air India has once again taken the lead in introducing further cuts in its fares on key domestic routes, which may lead to another round of 'fare war' among domestic carriers, including the no-frill ones.

Under the new APEX-21 scheme, the passenger can avail of a basic fare of Rs 99. Coupled with this, he or she would have to pay Rs 225 as Passenger Service Fee of the government and a fuel surcharge of Rs 2,700. However, the travel has to be undertaken on or before February 28, an Air India spokesman said.

The scheme is effective on most of the state-owned carrier's domestic route network.

The last round of fare reduction was on December 30, when the state-owned airline had substantially slashed basic fares on 20 major sectors, averaging a reduction of over 50 per cent. Thus, on most of the Air India (Domestic) network, an air traveller can avail of a fare of Rs 3,024 inclusive of taxes.

Since October last year, fares have come down considerably and domestic carriers have again started competing with one another despite their financial health and the global meltdown.

The competitive fares and several other schemes like advance purchase and companion-free travel on business class, which were put on hold, have been re-introduced.

The price of aviation turbine fuel has come down by over 50 per cent to July 2005 levels, which has given the domestic aviation industry the much-needed relief to go in for fare cuts to boost the sagging passenger traffic.

In a bid to give a boost to their global operations, the government is also considering amending the official travel rules for its employees going abroad to book themselves only on Indian carriers, instead of foreign airlines.

There are a sizable number of government employees who go on official trips abroad each year. The rules, which earlier ensured that they travelled only by Air India, were amended some years ago to allow them choose any airline.

But now the government wants to revisit this rule when three Indian carriers -- Air India, Jet Airways [Get Quote] and Kingfisher Airlines -- have mounted international operations on a big scale, official sources said.

Sources said where an employee has to take a connecting flight to a destination not served by these three carriers, he or she can opt for foreign airlines that are in partnership with the Indian carriers.

While foreign operations on some major routes like India-UK and India-Europe by Indian carriers have been hit by 'predatory pricing' by their foreign competitors, the government, which does not control such pricing, is considering making such moves to protect the interests of Indian carriers.