Now, Air India joins fare war; experts say airlines preparing for Tony Fernandes' Air Asia entry into market

Feb 26 2014, 21:25 IST
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On Monday, SpiceJet triggered a third round of fare war in the last one month, lowering fares by up to 75 pct. (AP) On Monday, SpiceJet triggered a third round of fare war in the last one month, lowering fares by up to 75 pct. (AP)
SummaryDiscount offered by Air India is however applicable only on select domestic routes.

Flag carrier Air India has finally joined the ticket price war, pushed by Tony Fernandes' AirAsia, as it announced 30% discount on fares for travel between March 29 and September 30, the state-owned airline said in a release on Wednesday - a tussle initiated by SpiceJet earlier this week.

The discount offered by Air India, spread across 115 flights operated by the airline, is however applicable only on select domestic and the domestic leg of international flights. The bookings will also have to be made between February 27 and March 1, to avail the offer.

Fares under the discounted scheme, start from as low as “Rs 1586 for Goa-Mumbai sector, Rs 1889 for Delhi-Lucknow sector, Rs 3470 for Mumbai-Kolkata sector and Rs 2557 for Trivandrum – Mumbai sector, exclusive of taxes,” the airline release added.

Low cost carrier Spice Jet on Monday triggered a price war by offering up to 75% off on base fare and fuel surcharge relative to last minute fares, for travel between April 1 and June 30, 2014, applicable for bookings made till February 26. Other no frills like IndiGo and GoAir quickly announcing similar schemes, within hours of SpiceJet's announcement. This was the third time that the Chennai-based airline shelled out discounted fare in the last two months.

Full-service carrier Jet Airways, however, entered the price war only on Tuesday as it launched a three-day sale of 60 days and 30 days apex fares on domestic flights operated by Jet Airways and JetLite. Travel under this offer is valid from March 27 to September 30, 2014.

“Airline operators are looking to fill their seats that are currently running below optimum capacity. But additionally, with Air Asia soon entering the scene, current operators are preparing for the tight competition in prices it will bring,” said Jackson Fernandez, Managing Director of travel portal Wego.com.

“By coupling with distribution channels airlines can reach out to intended audiences who are looking to avail these discounts,” he added.

Travel operators say that demand for air tickets to key leisure destinations like Goa and Kerala have increased tremendously after the announcement of the fare cuts.

“We are already seeing strong demand on the key leisure destinations like Goa, Kerala, etc. and bookings have more than doubled post the announcement. We expect other airlines to follow suit with similar discounts as these prices are sure to strike a chord with the leisure traveler,” said Sharat Dhall, President of Yatra.com.

“Our website has witnessed a three times growth in visitors and we sold over 60,000 tickets on Tuesday alone. Delhi, Mumbai and Bangalore combinations continue to be the top-selling routes, while leisure sectors like Goa and Srinagar have also seen a big spike,” said Rajesh Magow, Co-founder & CEO-India, MakeMyTrip.

“These promotions have definitely fueled summer-holiday breaks for larger groups (such as families) since we saw a higher proportion of group-bookings compared to single-passenger bookings. Also, a higher proportion of return bookings indicated planned leisure and business travel,” he added.

Recently, a report by Center for Asia-Pacific Aviation (CAPA) said that Indian carriers lost $1.65 billion on revenue of $ 9.5 billion in FY13, while 40% of the annual loss was generated in fourth quarter (January-March 2013) period itself.

The fourth quarter is generally considered the weakest in the year, according to industry experts, when airlines often struggle to fill up its seats.

“The Indian consumer is evolving and seeing the pattern since last year, they have begun expecting such discounts more often. Typically what we have observed so far since last year is that whenever an airline has dropped fares or offered discounts on advance booking, other carriers have matched their pricing to keep their market share,” added Vikram Malhi, GM, Southeast Asia, Expedia.

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