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Says though India is a
market of low-cost carriers, it is not of low-cost fares airlines
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Captain GR Gopinath, pioneer of low-cost
aviation, has accused domestic airlines of running a cartel in fixing fares.
At a panel discussion at the Centre for Asia Pacific Aviation’s summit in Mumbai on Tuesday Gopinath also pointed out that airlines should price the fares in such a manner to maximise loads. However, he also emphasised that ticket selling should be above cost.
Gopinath said, “The entry level fares of all LCCs and Full Service Carriers does have only around Rs 500 gap. There is a cartel to fix the price of the bottom. Break the cartel and then only the market will expand.”
He said that though India is a market of low-cost carriers (LCCs) but not of low-cost fares airlines.
Neil Mills, the Chief Executive Officer of Spicejet, said, “There is no cartel. If there was a cartel why would we all be losing money? If we manage to fix prices at levels where most carriers lose money, it does not seem good move.”
Gopinath added, “Despite the cost structure, the cost per available seat kilometer, an industry benchmark for Indian LCCs, is comparable to Ryan air. You cannot get below that. I do not think there is a future for any of us if we do not expand the consumer base.”
So we need to figure out what do we need to do otherwise, we will be cannibalizing each other’s passengers, he added.
At a panel discussion at the Centre for Asia Pacific Aviation’s summit in Mumbai on Tuesday Gopinath also pointed out that airlines should price the fares in such a manner to maximise loads. However, he also emphasised that ticket selling should be above cost.
Gopinath said, “The entry level fares of all LCCs and Full Service Carriers does have only around Rs 500 gap. There is a cartel to fix the price of the bottom. Break the cartel and then only the market will expand.”
He said that though India is a market of low-cost carriers (LCCs) but not of low-cost fares airlines.
Neil Mills, the Chief Executive Officer of Spicejet, said, “There is no cartel. If there was a cartel why would we all be losing money? If we manage to fix prices at levels where most carriers lose money, it does not seem good move.”
Gopinath added, “Despite the cost structure, the cost per available seat kilometer, an industry benchmark for Indian LCCs, is comparable to Ryan air. You cannot get below that. I do not think there is a future for any of us if we do not expand the consumer base.”
So we need to figure out what do we need to do otherwise, we will be cannibalizing each other’s passengers, he added.
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