Low-cost airline IndiGo?s decision last week to fly on overseas routes has not led to any tariff war. As per data, this has happened for the first time as average air fare on international sectors have in the past dropped 15-20% whenever a new player entered with promotional fares.
For instance, in 2010, JetLite reduced fares on the Delhi-Kathmandu route when rival low cost carrier SpiceJet launched its maiden overseas flight with a promotional one-way fare of R1,499 (exclusive of fuel surcharge and taxes).
Similarly, when Air Asia started its Delhi-Kuala Lumpur service last year, rival Malaysian Airlines cut fares to woo passengers.
Airfare on the Chennai-Colombo route had fallen sharply in 2004 when Jet Airways and Air Sahara (now JetLite) started flights on the route. Then, Indian Airlines had cut fares twice soon after the two players had launched their services.
On why there was no fare cut with IndiGo launching overseas flights, analysts said this is because the carrier has consciously introduced a limited number of flights, with only 1,260 seats per week.
?IndiGo has not added much capacity on flights to Dubai, Bangkok and Singapore. The airline has offered an introductory return fare of R 9,999 for the first 25,000 seats. The number of additional seats on each sector is just 50-55 in a period of three months. Given the existing seats operated by foreign and Indian carriers, the addition is not much,? industry sources said.
?The passenger demand for IndiGo?s flights is good. This is in spite of the fact that rival airlines have not reduced fares,? Travel Agent Association of India (TAAI) president Rajji Rai said.