Discounted airfares fail to yield airlines' expectation

May 06 2014, 21:28 IST
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SummaryIndian airlines, especially no-frill carriers like SpiceJet and IndiGo, initiating a fare war to offer discounted tickets to attract passengers.

The much-touted discounted airfares by Indian carriers did not draw many passengers in March as the actual passenger traffic and average revenue earned from it slid by almost one per cent.

Latest domestic air traffic figures released by the International Air Transport Association (IATA) showed that Indian airlines in March recorded minus 0.7 per cent Revenue Passenger Kilometers (RPK), which measures actual passenger traffic.

The available seat kilometers (ASK), which measures available passenger capacity, grew by 7.3 per cent, while the passenger load factor, that shows the percentage of ASKs used or seats occupied, was 71.4 per cent.

The slowdown in revenue earned or passengers flying came in spite of the Indian airlines, especially no-frill carriers like SpiceJet and IndiGo, initiating a fare war to offer discounted tickets to attract passengers.

March also saw Asia Pacific carriers experiencing "some of the weakest traffic growth" with international traffic growing just by 1.1 per cent compared to a year ago.

Globally, the total RPKs increased 3.1 per cent compared to March 2013, which represented a slowdown in comparison to the February year-over-year traffic increase of 5.6 per cent.

"After a number of very strong months, we are seeing a slowing of demand growth. The strong performance of advanced economies nevertheless is likely to support the continued growth of traffic in the coming months," said Tony Tyler, IATA's Director General and CEO.

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