Don't let planes go empty, lower spot fares, says ministry
Airline seats are a perishable commodity. Lowering fares would bring last-minute passengers, fill seats and increase revenues. HT reports. Not just a flight of fancyindia Updated: Feb 11, 2013 22:32 IST
The aviation ministry has suggested that Indian carriers charge less for spot fares (tickets bought at short notice) in order to fill up aircraft, thus increasing their revenues.
Indian carriers, on an average, have load factors of 75-80%, which means at least 20% of the seats in an aircraft are vacant each time they fly. Fares go up and tickets booked on the day of travel are usually the costliest - a big deterrent for passengers buying tickets on the day of travel.
Government is also working on mechanism to fix the lowest fare band so that airlines don't bleed. This was prompted by a SpiceJet offer wherein the airline offered seats for as low as Rs 2013.
Ministry officials, in a meeting with stakeholders last week, suggested that airlines should lower the spot fares giving more people a chance to fly. The ministry, however, made it clear that it had no intention of regulating airfares.
"Airlines have data of average occupancy for all flights they operate," said an aviation ministry official. "They have an idea on how many seats, on an average, they fill on a particular route. If, say five hours before departure, 20% of seats are still unsold, airlines can easily lower the fares."
"This seems like a good idea and makes good business sense. Airline seats are a perishable commodity," said Rajji Rai, advisor to the Travel Agents Association of India.
Sharat Dhall, president (online), Yatra.com, said airlines offering lower spot fares was common practice in the US. "Surely, this should be done. A vacant seat is a seat lost forever. The move will expand the market and realistically speaking, would increase capacity by at least 7%," Dhall said.
Airlines, however, don't seem too excited. "It should be left to airlines to decide if lowering spot fares will help or not," said an executive of a low-cost carrier.