‘Indian carriers sell tickets below cost’ | india | Hindustan Times
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‘Indian carriers sell tickets below cost’

In their bid to capture a larger market share, Indian carriers have been selling tickets below the cost price while blaming high jet fuel cost as the main reason for their falling profit margins, says a senior aviation industry official.

india Updated: Jun 09, 2009 22:04 IST
Samiran Saha

In their bid to capture a larger market share, Indian carriers have been selling tickets below the cost price while blaming high jet fuel cost as the main reason for their falling profit margins, says a senior aviation industry official.

“For the past two years, Indian carriers have sold tickets below the cost price. This led to per seat yield as well as total revenues for the airlines go down,” Dinesh Keskar, Boeing India president told Hindustan Times at the sidelines of an industry seminar here on Tuesday. “Indian carriers hammered themselves by irrational pricing strategy. They need to do better yield management.” “Domestic carriers in India lost nearly Rs 10,000 crore in 2008-09 on account of spiralling fuel price in the first half of the fiscal, excess capacity and irrational pricing” he said.

Indian market is now burdened with overcapacity but despite the demand-supply gap narrowing now, the yield per seat remains the same as airlines have chosen to sell below the cost price. “I feel starting October things will be good. By January-February next year passengers will come back to airlines and we are already bottoming out,” he said.