Jet, Air India cut international fares to garner market share

Written by Rhik Kundu | Mumbai | Updated: Jun 1 2014, 06:53am hrs
AirfaresJet Airways is offering fares for as low as Rs 40,000 for a round trip to the City of Light.
Indian carriers like Air India and Jet Airways have initiated a kind of price war on select international routes in their attempt to win traffic from global competitors.

Jet Airways, which earlier this month started direct flights from Mumbai to Paris, is offering fares for as low as R40,000 for a round trip to the City of Light. While the spot price for a ticket on the Jet Airways flight can range between R45,000 and R50,000 for a return ticket, opting for a foreign airline can cost anywhere between R50,000 and R70,000 on the same route.

Some foreign airlines that ply on the route are Air France-KLM, Qatar Airways, Lufthansa, Swiss Air, Emirates, SriLankan Airlines, EgyptAir, Etihad, Kuwait Airways, Turkish Airlines, British Airways and Thai Airways.

State-owned Air India, which also operates a single-stop flight (via New Delhi) to Paris is offering a return ticket for as low as R50,000. Only SriLankan Airlines is offering a lower price than Jet for a return ticket on the route at around R38,000.

There is a lot of catching up to do for us in this sector since we are a new entrant. And all existing players want to do is fill up their flights. This was the reason why we rolled out an inaugural return fare of R29,990 which was available for the first few days, said Raj Sivakumar, Jet Airways senior vice-president of planning & alliances.

You could expect Jet Airways to be return to the same pricing points that is prevalent in the sector once we start getting more load, Sivakumar added.

Air India, which is starting daily non-stop flights connecting Delhi to Rome and Milan from June 6, is offering an introductory fare for as low as R34,000 for a return ticket on the sector. Without the offer, tickets on Air India flights on these routes cost R43,000-45,000, if one were to book on travel portals like Makemytrip or Yatra.

Other international carriers charge anywhere between R55,000 and R1 lakh for a return ticket on this sector.

Air India is also planning to start direct flights to Moscow, Melbourne, Sydney and Birmingham in the coming months with similar low price points.

An Air India official confirmed that the prices, especially for the economy class, would be very competitive as the airline is looking to increase its market share in the international segment.

Air India expects all its new services to generate positive surplus over costs within a reasonable period from start of operations, said an official.

At present, international services account for 60% of Air Indias passenger revenue, the official said, adding, Further, being a network carrier, any addition of services to the network also generates incremental revenues on the existing services on account of the transfer traffic.

Another official said that Air Indias international route is slated to be profitable for the first time in eight years during FY14.

For Jet Airways, revenues from its international operations stood at R2,653 crore or 57% of its total revenues during the recently concluded March quarter.

Industry experts say that the competitive pricing by Indian airlines is an attempt by them to further increase their market share.

However, this is unlikely to give rise to a fare war, said Deep Narayan Mukherjee, senior director at India Ratings & Research.

Just pricing alone doesnt change the dynamics when it comes to international flights. There are other factors like timing, convenience, in-flight services and luxury that are also taken into consideration, he said.