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Jet Airways mulls additional surcharge

India's privately owned Jet Airways is talking with competitor Indian Airlines about an additional surcharge on tickets to pay for insurance costs after last month's skyjackings, Jet's chief executive said on Thursday.

Both Jet and Indian Airlines, which control 90 per cent of India's domestic air passenger market of 13 million, slapped a surcharge of 100 rupees on passenger tickets from October 1 to pay for higher insurance premiums.

Earlier this week, unlisted Jet Airways arranged for third-party war risk insurance from the market after failing to get a government guarantee.

New Delhi has extended a guarantee to Indian Airlines and long-haul Air India till the end of October.

"The third-party insurance has come at a cost," Jet Airways Chief Executive Officer Steve Forte told Reuters.

"A possible revision of the 100-rupee surcharge is under debate amongst domestic airlines, including Indian Airlines. The (existing) amount in no way represents the extra insurance costs we are bearing."

Jet Airways was covered to the tune of $750 million for a single incident of war or terrorist attack on the ground before global insurers capped third-party war risk insurance at $50 million in the wake of the hijack attacks.

Fall in traffic

Forte said Jet's traffic had fallen 14 per cent since July due to the economic downturn and the September 11 plane attacks.

"So far, traffic is down 14 per cent on an average from last year," he said. "It does not seem to be the fear of flying. It's just that companies are cutting costs, and the first thing they cut is travel costs."

Despite the industry's troubles, Jet Airways, the country's No. 2 and fastest growing airline, has no plans to postpone plans to expand its fleet of 29 Boeing 737s and six propeller-driven planes.

Jet Airways, owned by entrepreneur Naresh Goyal, leased its seventh ATR 72-500 turbo-prop over the weekend. It will collect two brand-new Boeing 737 aircraft in the first quarter of next year from the U.S. plane manufacturer.

The airline will also replace two Boeing 737-400s later this year with leased Boeing 737-700s.

"We have no plans of postponing any of the aircraft deliveries. Signals from advance bookings show traffic will be back to normal by April next year," Forte said.

Jet Airways has speeded up cost-cutting measures in the wake of the hijacked plane attacks in the United States.

Managers of the airline, made up of 400 employees, accepted a 10 per cent salary cut at the beginning of this month. Salary cuts with other staff, including 350 pilots, are under discussion.

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