NEW
DELHI: SpiceJet's recent mega ticket sale at 2,013 a ticket, has spurred a
full-blown, but silent, fare war among its peers as they scramble to
drop fares, albeit discreetly. This has forced the fragile financials of a
sector to be put to test on the sustainability of the recent turnaround in the
sector.
To begin with, Air India dropped fares much lower than rival Jet
AirwaysBSE 0.68 % to surpass even the three budget
carriers on some routes Monday night, forcing the low-cost airlines to match
that drop. However, the travel industry fraternity says this is not where
things would stop as IndiGo, SpiceJetBSE 1.07 % and GoAir could drop ticket prices
further to protect their market share. The airlines in India are heading to a
lean season, which begins from February.
"Air India has dropped fares over the past two days
quietly to match those of budget airlines in order to maintain its market share as passengers will prefer to fly AI
over low-cost carriers to avail of better services like in-flight entertainment,
meals and the likes,"yatra.com COO (corporate travel) and Senior VP (air product) Sunny Sodi told ET.
Experts also say that Air India, which has expanded its
domestic market share from a dismal 14% to over 21% last year, doesn't want to
lose its hard-earned lead.
"We are heading towards a further reduction in
ticket prices as budget airlines may slash fares further after AI has matched
them. In comparison with December, we may see fare reduction by 15% in the
coming days," Sodi added.
However, Air India says that its move is in response to
JetKonnect, which dropped fares on 20 routes 10 days ago to match budget
airlines' levels.
"We thought it was a short-term strategy by
JetKonnect, but when it went on for over 10 days and there was the possibility
to lose passengers, we too did the same. But it is only on six routes, most of
them metro routes," a senior Air India official told ET.
When SpiceJet surprised the travel industry with its
special offer at 2,013 a ticket, DGCA officials decided to intervene as they
feared fares would become "distorted" and they had to protect the
industry from bleeding any further, just like they do when fliers complain of
sky-high ticket prices during peak seasons.
The move explains why IndiGo and GoAir, which were about
to announce discounts, decided to wait and watch.
No comments:
Post a Comment