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HindustanTimes Thu,18 Dec 2014

Jet Airways slashes fares, sets up price war

Tushar Srivastava, Hindustan Times  New Delhi, February 20, 2013
First Published: 00:39 IST(20/2/2013) | Last Updated: 02:11 IST(20/2/2013)

Air travel is affordable again.

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On Tuesday morning, Jet Airways — India’s second largest airline in terms of passengers carried — announced it was putting two million seats “on sale”, offering tickets for as low as Rs. 2,250. The booking window is open till February 24 midnight, but the low-fare tickets are good for the entire year.

Within hours, IndiGo, the country’s largest airline, and SpiceJet had matched Jet fares on many sectors. Sources said low-cost GoAir, too, had slashed fares and Air India could follow suit. Jet, IndiGo and GoAir have a combined domestic market share of close to 60%.

Gurgaon-based SpiceJet had initiated the fare wars when in January it had put one million tickets, priced at Rs. 2,013 each, for sale.

Industry experts, however, said Jet’s mega sale was very different from previous such schemes. “Earlier, airlines would introduce schemes where tickets would be sold for travel at much later dates. This time, however, even tickets for immediate travel are being offered at the sale price. A Delhi-Mumbai return ticket, which cost over Rs. 18,000 till yesterday (Monday), is now available for Rs. 6,600,” said Rajji Rai, advisor to the Travel Agents Association of India. http://www.hindustantimes.com/Images/Popup/2013/2/20_02_13-pg01a.jpg

“This is an excellent business strategy and the sale is already a grand success. Airline seats are a perishable commodity and a vacant seat is a seat lost forever,” Rai added.

Indian carriers, on average, have load factors of 75-80%, which means at least 20% of seats in an aircraft are vacant each time they fly. “What airlines are trying to do is to fill up a certain number of seats and shore up demand on weak routes,” said Sharat Dhall, president (online), yatra.com.

The Jet sale covers two million seats across 57 destinations for six days, effective February 19 until February 24 midnight. “This special economy one-way fare offer will be available for travel on domestic sectors until the end of the year,” the airline said.

"Twenty lakh (two million) seats would be around 15% of Jet's total capacity," said Dhall.

As IndiGo started matching fares on most sectors, it did not officially announce a scheme, though. "Other airlines responded with reduced fares of their own. GoAir was offering even lower fares on some routes," Dhall said.

In January, when SpiceJet had reduced fares, aviation regulator DGCA had advised other airlines not to follow suit. "We are closely monitoring the situation but we won't intervene," a senior DGCA official said. Senior aviation ministry officials, however, said airlines offering such low fares that don't even meet costs was "suicidal".


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