Low cost is not cheap anymore. These days a
one-way ticket on an average would cost you a minimum of `6,000. Ticket prices
have hit an all-time high due to several reasons ranging from high cost of
aviation turbine fuel, increased airport charges (in case one is transitting
from the metros) and also fewer seats that are available due to contraction in
the number of seats due to sub-optimal operations by private carrier Kingfisher
Airlines and also the ongoing strike by Air India pilots.
Till recently when low cost flying came to
India in 2005 with the advent of Capt Gopinath led Air Deccan (now Kingfisher
Red, now nearly defunct) a round trip from Delhi to any other metro would cost
about `5,000, but today the same trip costs you `12,000 or more depending when
the tickets were booked, however, early bookings can fetch slightly competitive
rates.
To make the market more price sensitive,
Air Deccan also offered some (about 10 tickets) per flight at `1 on a first
come first serve basis, but that has become a thing of the past now. However,
continuing with the same tradition, private carrier SpiceJet, to encash on the
summer rush and lack of availability of seats is offering a limited number of
one-way tickets for as low as `777, but the offer was just for a day, the
airline did brisk business and sold about 38,000 tickets in an hour.
The falling rupee, a near 14% rise year on
year of aviation turbine fuel prices and the overall sluggishness in the
domestic market has left flyers with little choice but to contend with
expensive air travel.
Aviation sector in India is one of the most
taxed sectors - fuel, aircraft leases, airport charges, air passenger tickets,
air navigation service charges, maintenance costs, fuel throughput fees,
into-plane fuel fees, and other items subject to service taxes.
“Almost 70% of the airline costs like
maintenance, jet fuel, spares etc. are dollar denominated. Rupee depreciation,
rising jet fuel and the prevailing competition in the domestic market has
wrecked the balance sheets of most Indian carriers,” says Amber Dubey of global
consulting firm KPMG.
“Whilst it is true that fares have gone up
significantly post Kingfisher’s reduction in flight schedule, we shouldn’t
forget that
ATF costs are currently much higher than in
the pre-low cost airlines era. More importantly, after the crisis airlines are
no longer chasing market share at the expense of profitability something that
they unwisely did earlier by offering below-cost level fares,” says former
executive director Air India and aviation commentator Jitendra Bhargava.
“Airlines cash in on the urgency. Even if
there are enough number of seats available the airline will say that please
book now or else even these tickets would be sold out. However once inside the
aircraft you find nearly half the seats vacant. I don’t understand why can’t
there be a ceiling on the price of airline tickets,” a passenger travelling on
a short haul flight said. The passenger had to buy a one-way ticket for `6,500.
Destinations like Kullu and Leh which are
not served by the low cost carriers airlines are selling at a premium, thanks
to the holiday season. A return ticket between Delhi-Kullu for a less than an
hour’s flight costs `20,000.
Jet Airways’ low-cost carrier Jet Konnect
shows air-fares that are higher than the carrier’s regular flights. Though the
airline maintains that the capacity it offers increases on an average of 15 per
cent every year, no relief is seen for passengers.
“Air India, earlier Indian Airlines, is
today what it was in the pre low-cost airline era. Capacity constraint was of
course there on mainline sectors between metros. Fares were uniform, no
subclasses within the economy as is now. Food was an integral part but
in-flight entertainment system wasn’t there. Airlines did not market as
vigorously as they do now. Competitive fares came in not only because of low
cost airlines but also when capacity exceeded passengers and airlines began to
lure passengers in a bid to enhance market share,” Bhargava said.
Operational Economics played no role in
this era as all airlines vied to get passengers as a result of which the gap
between the fares of low cost and legacy carriers narrowed. In the initial
stage of low-cost phenomenon, fare difference was substantial. Gap narrowed as
the capacity increased.
Today, DGCA has created price-bands for a
particular number of kilometers which on the higher side are `10,000 and lower
side are `3,000. Naturally in these expensive times none of the carriers are
elastic towards lower fares.
http://newindianexpress.com/business/news/article545624.ece
