After Air India and Jet Airways, IndiGo cuts ticket prices by up to 40% to lure travellers

NEW DELHI: Airlines have declared a full-blown price war to entice more passengers this festival with budget carriers IndiGo becoming the third to offer up to 40% discounts on a month's advance booking, after Air India and Jet AirwaysBSE 1.33 % did so a few days ago.

SpiceJetBSE 6.47 %, the third-largest airline in terms of market share, is also expected to announce a similar move shortly, two travel industry sources said.

Though these discounts are a much-needed respite for passengers who have either reduced air travel or have shifted to other modes of transport due to high airfares this year with the removal of Kingfisher Airlines' capacity, airline players think this may impact their financials.

"Discounting fares in an already depressed yield market when costs are rising is not welcome news and it will put a lot more pressure in the airline sector. But I don't believe it will impact our financials as much as last year due to the fact that capacity has come down across the industry and we expect a strong holiday season in both international and domestic markets," a senior executive of Jet Airways told ET.

Last Thursday, Air India came out with the 'Jaldi Jaldi' scheme, offering passengers up to 40% discount on various routes while Jet Airways came up with similar discounts a day later.

Under 'Jaldi-Jaldi', tickets booked 30 days in advance on Mumbai-Goa sector would cost Rs 2,970, Mumbai-Delhi Rs 4,931, Delhi-Srinagar Rs 3,516, Kolkata-Delhi Rs 4,818 and Chennai-Port Blair Rs 4,378, inclusive of taxes.

Similarly, IndiGo is offering return fares of Rs 9,591 on Delhi-Mumbai, Rs 10,202 for Delhi-Bangalore, Rs 9,954 for Delhi-Hyderabad, Rs 9,425 for Delhi-Kolkata, Rs 9,950 for Delhi-Chennai.

Fares on these routes have been otherwise ranging anywhere between Rs 6,500 and Rs 9,000.

Sector experts also think that this is a strategic move to get more passengers in the festival season as the loads or aircraft occupancy has been very low over the past few months.

"Airline inventory is a perishable commodity and everybody has been having lesser loads due to higher fares. It's better to sell some cheap tickets and then make up by raising fares as the flight date comes close so that more seats are sold. This is good for consumers as it would encourage leisure travellers," global travel portal Expedia (India) Marketing Head Manmeet Ahluwalia said.

There are contrarians who believe that this time it is different. "I don't expect any fare wars in the near term. No one is interested in ruining the market again. The era of loss leadership pricing is over," said Kapil Kaul, CEO, South Asia, Centre for Asia Pacific Aviation.

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