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HindustanTimes Thu,31 Jul 2014

Get ready for lower fares as Tatas, AirAsia gear up to fly

Tushar Srivastava , Hindustan Times  New Delhi, May 09, 2014
First Published: 23:40 IST(9/5/2014) | Last Updated: 23:44 IST(9/5/2014)

The next six months will be a defining period for Indian fliers, at least as far as fares are concerned. Before year-end, two new airlines, both backed by the Tata Group, will be crisscrossing the Indian skies, bringing ticket prices plunging.

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The last time that the world's ninth-largest aviation market saw such flutter was almost a decade ago, when budget carriers Go Air and IndiGo began operations.

While the no-frills AirAsia India will take on budget carriers IndiGo, SpiceJet and GoAir, the Tata-Singapore Airlines combine will occupy the premium space in which Jet Airways and Air India operate.

Even before the new airlines have taken off, an indication of things to come has already been served — by competitors. Since January, domestic carriers have announced at least five advance purchase sales , never seen before in the past. "The flurry of discounts seen since January is just a precursor of things to come," said Subhash Goyal, chairman, STIC Travel Group.

AirAsia India CEO Mittu Chandilya has said his airline will offer 30% cheaper fares as compared to those offered by other Indian carriers.

Chennai-based AirAsia India, which got its air operator's permit recently, is likely to start operations first, connecting smaller cities to begin with.

Tata-SIA plans to commence operations in September with 87 flights connecting nine cities to Delhi, gradually increasing this to over 300 flights in four years.

The AirAsia-Tata start-up got another boost on Friday, when Delhi High Court dismissed a plea by the Federation of Indian Airlines, which represents private Indian carriers, to stay its flying licence granted by the aviation regulator.

"AirAsia will add to the financial challenges of the existing players," said Kapil Kaul, South Asia CEO of aviation consultancy . "Tata-SIA will impact Jet Airways and Air India, especially Jet, as their domestic product has significantly suffered over last few years."

"AirAsia will have a very aggressive pricing structure. It's going to completely change last-minute pricing," said Rajji Rai, chairman, Swift Travel International Ltd. "The impact should be visible by this winter."


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