State owned air carrier, Air India has decided to slash the fuel surcharge by Rs 400 for all routes. This would pave the way for cheaper air travel and tariff revision by the private carriers. Currently, domestic carriers are charging a fuel surcharge of Rs 2,350 per passenger for distance up to 750 km and Rs 3,100 for above 750 km. Surcharge was increased following the significant increase in the crude oil price in the international market, around three months ago. The fuel surcharge for the short flights now would be Rs 1,950 as compared to Rs 2,350.

Crude oil rates are now at all time low, at $45-$50 a barrel and Aviation turbine fuel (ATF) prices are also in the comfortable zone. Earlier, Union Aviation Minister, Praful Patel asked the air lines to cut fares in line with the declining crude rates in the international market. Meanwhile, private carrier decided to reserve the decision regarding cut in passenger fares. However, they are forced to revise tariffs following the initiative by Air India.

Private carrier Kingfisher has earlier asked the government to declare ATF as a 'declared goods', to have a uniform 4% sales tax across the country. The Air India CMD, Raghu Menon said the global crude prices are still fluctuating and AI hopes for stability in prices at the current level. The carrier is planning to raise $1 billion to buy 21 Airbus aircrafts by 2011.