Commentry on Rising Fuel Prices Essay

pedigree excursion is fast getting come out of reach for comparatively elegant town Indians.According to Airport Authority of Indias (AAI) latest figures, April 2008 see lesser number of tribe rainflying from places wish well Goa, Patna, Thiruvananthapuram, Guwahati, Calicut, Srinagar and even touring car hotspots like Udaipur, Jammu and Jodhpur over same period last year.On a national basis, the harvest-feast rate of domestic passengers this year has fall to single digit, down from the heady 30% to 40% figures recorded in past three years.While this growth was largely payable to portlines fling attractive f atomic number 18s, the drop in passenger f base was as high-pitched as 35% in Jodhpur or 24.5% in Jammu. These figures watch the alarm bells ringing as the steep hike in jet elicit legal injurys which dedicate led to sharp increase in appearancefares started hardly in April and the fall in flyers could get oftentimes worse for later on months.Till April, go off surcharge on each ticket was Rs 1,650. like a shot the same surcharge is between Rs 2,250 and Rs 2,900 and base fares are in addition much higher, making flying a fancy for many.We are slowly make a situation where only flights between metros or ones originating or ending there may remain viable for ancestrylines at these operating comprise levels. State governments must come forward and offer low gross revenue tax on jet fuel to airlines in return for an confidence that the latter would neither cut flights, nor hike fares to those places, said a superior AAI official.In fact, the huge 30% to 40% growth recorded in past four years (after the advent of budget carriers) was substantially due to airlines rushing in with flights to places where bus and rail users could be shifted to air by the lure of low fares. precisely now with airfares on the rise, this connectivity is under barren threat. Airlines have already started pulling out of unprofitable centres.SpiceJet ex ecutive president Siddhanta Sharma gave the airlines perspective.Basically flights from most small cities are short haul. On much(prenominal) sectors, high airfares now compete with former(a) cheaper fares of new(prenominal) humours of transport and air break becomes unviable. Only a reduction sales tax on jet fuel may help keeping such places affiliated as we would be able to offer competitive fares, he said. But as state government still dilly dally on this issue, their connectivity is suffering. Cities like Lucknow, Varanasi, Trichy, Patna and Rajkot witnessed much lesser domestic flights in April 2008 than last April.While fares of multinational flights havent risen as sharply, international passengers have also declined.Times of IndiaIntroductionThe Indian Aviation sector has grown by leaps and bounds over the last financial year but this plainly booming sector is now slowing down. The above article negotiation about the decline in the number of air travellers from citi es other than the metropolitans. The growth in the number of passengers came about because of one major reason, the introduction of low budget airlines which fly at a much lower embody. level(p) this effect is being negated by the rising cost of civil aviation. I bequeath use the concepts of pickax, Necessity and Price Elasticity of regard.The alongside diagram shows the increase in Jet fuel or aviation fuel over the last few months. It also comparatively shows how expensive travel by car is becoming, due to the rising fuel coats.Figure 1Concepts InvolvedThere are mainly three basic concepts complex in this article- Choice, Necessity and Price Elasticity of train.1. Choice In todays day and age of cut throat competition, if we need to travel from New Delhi to Mumbai we have several options regarding as to what mode of travel that can be interpreted. Flying is obviously the fastest and least time consuming and according to commonplace belief was also rattling expensive. Si nce the introduction of low budget carriers, the cost of flying drastically reduced, as these airlines worked on a NO FRILLS policy meaning that they offered no serve up whatsoever.As a result travel by aeroplane became as expensive as travelling by a second or third class Air Conditioned compartment by the most popular mode of transport in India namely the Rail ways. As a go out the people travelling by rail reduced in the individual ticket brackets and the passengers aboard aeroplanes increased. People from small towns thus for better and fast travel increased their journey a little bit out of choice and took a plane from the nearest drome of their departure to the airport nearest to their destination.Footnotes1. Financial Year- the time period between the 1st of April to the thirty-first of May. It is called a financial year as the government of India asks for the finances of a company between this period.2. Low Budget Airlines- They are those airline serve that operate on a lower cost due to sealed in-flight service policies that they follow.As the bell of aviation fuel rises so does the cost if the ticket required to sit on a plane and as a result people from smaller towns are not determination air travel to be a viable means of tape transport as they found to be having a lesser income than travellers in large cities are resorting to the next best option for their travelling needs.2. Necessity A necessity in economics means a compulsion to knock down a certain good or service. This applies to a lot of people who travel from larger cities by air. Maximum usage of domestic air travel is done due to some business activity. Businessmen are in vast numbers in big cities such as Calcutta or Bangalore and as a result they not only have a want to travel but this want of theirs is a need. They travel by air as it is the best and the most convenient way to get to a destination in which business has to be transacted. As a result he businessman would not care what the price of air travel is as they gain more business in exchange for paying a higher price.3. Price Elasticity of Demand Elasticity of demand is the responsiveness of the demand of a commodity to a given change in the price of a commodity. We can guess the kind of people who travel by air in twain categories, one who have a super expansible price pushover of demand for a commodity and the other who have a relatively inelastic price elasticity of demand for air travel.People from smaller towns will be generally classified in to the first kinsfolk as they use air travel as an alternative to other modes of transport and seeing a rise in the price they will happily revert back to their earlier means of travel. Travellers from large cities on the other hand will be classified into the second category. They travel by air out of necessity or because they have adequate means to account for a rise in the price of air travel. As a result a change in the price will induce sm all town travellers to cut down on air travel while not so much bear on others from larger cities.ConclusionTravelling by air for people in smaller towns was a better alternative and not a inevitable change. As a result when price went against them, they simply chose not to fly by air.Footnotes1. Highly Elastic Price Elasticity of Demand A change in demand which is related to the price of and article. It is called highly elastic as the change in demand is large due to a change in price.2. Highly Inelastic Price Elasticity of Demand A change in demand which is related to the price of and article. It is called highly inelastic as the change in demand is not actually large due to a change in price.3. Aviation fuel- The fuel consumed by aeroplanes.4. Domestic air travel- Travel which is within the country.5. Want- It is a swear to consume a good or service backed by the ability and willingness to pay for it.6. Business- A venture taken on by an individual with the purpose of gaini ng a profit out of it.Bibliography* The article was taken from the Indian newspaper The Times of India. Dated 2nd July it is write by a journalist by the name of Saurabh Sinha. The link to the article is http//timesofindia.indiatimes.com/Steep_fares_lead_to_drop_in_small-town_flyers/articleshow/3186374.cms* The footnotes and other definitions were written with the help of the book Economics Course Companion written by Ian Dorton and Jocelyn Blink.* Footnotes and definitions that are not found in the book were written out of memory and previous reading from various unrelated and previously read newspapers and articles.* http//content.edgar-online.com/edgar_conv_img/2007/12/21/0001362310-07-003512_C71797C7179706.GIF