Budget carriers Indigo and SpiceJet have been gaining market share at the expense of Jet Airways.
NEW DELHI: Full service carriers Air India and Jet Airways seem to have thrown in the gauntlet on budget airlines to garner more market share this festival seasonby announcing up to 40 per cent discounts on tickets booked a month in advance.
Budget carriers Indigo and SpiceJetBSE -1.99 %have been gaining market share at the expense of Jet Airways. Air India's aggressive first mover stance to introduce special fares is significant as it comes in the backdrop of civil aviation minister instructing Air India to garner more loads (aircraft occupancy) few days ago.
The national carrier announced the "Jaldi Jaldi" scheme under which the fare for tickets booked at least 30 days in advance will be 40-50 per cent cheaper compared to the existing instant purchase fare, the airline said.
A day later, Jet Airways announced similar discounts saying, "The new apex fares will go on sale effective September 22 and will offer guests attractive savings on several domestic routes. Travel validity for 21-day apex fares is till October 18, 2012, while the 30-day apex fares have no expiry date."
The national carrier announced the "Jaldi Jaldi" scheme under which the fare for tickets booked at least 30 days in advance will be 40-50 per cent cheaper compared to the existing instant purchase fare, the airline said.
A day later, Jet Airways announced similar discounts saying, "The new apex fares will go on sale effective September 22 and will offer guests attractive savings on several domestic routes. Travel validity for 21-day apex fares is till October 18, 2012, while the 30-day apex fares have no expiry date."
Travel experts say the idea behind such discounts is to be assured of filling up a certain number of seats and generating a fixed amount of revenue well in advance so that the carriers can sell the remaining seats at a premium. Going by the data given by sector regulator Directorate General of Civil Aviation (DGCA), airlines had an average occupancy of only about 70 per cent in August. This indicates that 30 per cent capacity is going unsold.
"The idea with discounts is that after around 20 per cent seats are filled, the remaining can be sold at a premium going forward. This is a great opportunity for Indian carriers to manage yields better," Travelocity MD Himanshu Singh said.
As budget carriers IndiGo and SpiceJet flew past Jet Airways and Air India, respectively, in August, becoming the largest and the third largest domestic airlines by market share in spite of smaller aircraft fleets, the discounts are aimed at wrestling back some of that lost market share. However, it will result in very expensive fares for those who don't book well in time, say experts.
"AT present, even 7-14 days before a flight, 60-70 per cent of airline's inventory is spare. But after the discount scheme, fares may shoot up by 40 per cent in the last seven days as substantial inventory would be sold off already at discounted price. This would allow airlines to sell more seats and make more money at the same time by having a mix of very high fares and low advanced price," said Keyur Joshi, chief opearating officer of MakeMyTrip.com.
Travel experts also think that following this move, even budget carriers will not remain far behind and are bound to introduce discounts, without saying it out loudly.
"The idea with discounts is that after around 20 per cent seats are filled, the remaining can be sold at a premium going forward. This is a great opportunity for Indian carriers to manage yields better," Travelocity MD Himanshu Singh said.
As budget carriers IndiGo and SpiceJet flew past Jet Airways and Air India, respectively, in August, becoming the largest and the third largest domestic airlines by market share in spite of smaller aircraft fleets, the discounts are aimed at wrestling back some of that lost market share. However, it will result in very expensive fares for those who don't book well in time, say experts.
"AT present, even 7-14 days before a flight, 60-70 per cent of airline's inventory is spare. But after the discount scheme, fares may shoot up by 40 per cent in the last seven days as substantial inventory would be sold off already at discounted price. This would allow airlines to sell more seats and make more money at the same time by having a mix of very high fares and low advanced price," said Keyur Joshi, chief opearating officer of MakeMyTrip.com.
Travel experts also think that following this move, even budget carriers will not remain far behind and are bound to introduce discounts, without saying it out loudly.
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