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  1. Air India, Jet Airways cut airfares up to 50 pct, start dog fight in Indian skies after Vistara entry

Air India, Jet Airways cut airfares up to 50 pct, start dog fight in Indian skies after Vistara entry

Air India rolls out hefty discounts 3 days after Vistara commences operations; Jet Airways set to follow suit.

By: | Mumbai | Updated: January 15, 2015 10:04 AM
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The comparable fare for Vistara and Jet Airways for tickets booked on Monday was Rs 12,235 and Rs 11,563, respectively.

The onset of January, beginning of a traditionally lean season for air travel in India (that lasts till March) and the arrival of a new competitor, Vistara, has once again led to a price war in the Indian skies with Air India and Jet Airways deciding to slash airfares.

Air India rolled out hefty discounts on short-term advance bookings on Monday, three days after rival full-service carrier Vistara, a joint venture between Tata Sons and Singapore Airlines, commenced operations. The Naresh Goyal-led Jet Airways will follow suit by slashing fares beginning today.

The January-March quarter is considered the weakest season in the commercial aviation sector, as it falls between the festive season that begins in September-October and summer vacations that begin in April-May. Airlines typically roll out discounts to attract passengers in this period, but the quantum of discounts may be higher this year as carriers will be eager to retain market share in wake of competition from Vistara. This may lead to an adverse impact on the already stretched balance sheets of some airline companies, though a steep decline in jet fuel prices over the last three months will provide some cushion.

The seven-day sale offered by Air India, valid for travel between January 16 and April 30, has tickets priced at discounts varying from 15% to 50%, depending on the dates of travel and the sector flown. Fares on Air India’s flights in the Mumbai-Delhi sector, where Vistara has launched operations, appeared to have been slashed the most.

An economy class return ticket on an Air India flight between Mumbai and Delhi, for travel on January 16 and return on January 30, is priced as low as R5,691. The comparable fare for Vistara and Jet Airways for tickets booked on Monday was Rs 12,235 and Rs 11,563, respectively.

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A Jet Airways spokesperson told FE that the full-service airline will offer discounts on tickets booked between January 13 and January18, for travel between January 16 and April 15.

For instance, Jet Airways will offer economy class tickets on the Mumbai-Delhi sector cost R1,832 for one-way travel (including fuel charges but excluding taxes), on the Delhi-Mumbai route for R2,045, Mumbai-Chennai for R2,276 and Chennai-Mumbai for R2,499.

Jet Airways’ discounted offerings is inclusive of base fare and fuel surcharge, and passengers will have to pay for other taxes which is not included under the scheme, a Jet Airways spokesperson said.

According to Mumbai-based travel agents, both Air India and Jet Airways had earlier rolled out short-term discounts — late last month — which were valid for bookings made during the month of January.

The recent series of sales has helped Air India, which has seen its bookings double since rolling out these discounts. “With tickets starting at as low as R1,557, the Air India sale has witnessed a very enthusiastic response,” said Ranjeet Oak, senior vice-president, flights, at MakeMyTrip. “Bookings are up by over 100% on a week-on-week basis (as on date).”

According to Yatra.com, in the last one month, overall airfares in India have reduced by around 35%, while the bookings have soared 400%, compared to the preceding 30 days.

An Air India official, speaking on condition of anonymity, denied that the predatory pricing had anything to do with Vistara’s launch.

“January-March is considered a lean season in the commercial aviation sector. Air India is offering discounts since it wants to fill up its seats, which will earn more revenues than flying nearly empty aircraft,” he said. But aviation sector analysts observe that Vistara has definitely played a role in the current price war.

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