Deccan forced to reverse fare hike
UB group spokesperson says Deccan’s proposal to hike fares by 10 per cent has been put on hold so that its guests can continue to enjoy value flying, reports Lalatendu Mishra.Updated: Aug 01, 2008 21:59 IST
Budget carriers IndiGo, SpiceJet and GoAir seem to be heading for a price war with big boys of aviation — Jet Airways, Kingfisher and Air India — in a move that would benefit low fare seekers.
A day after the three full service airlines along with Deccan increased basic fares by 10 per cent, the three budget airlines, controlling more than 25 per cent market share, resisted any such move till late Friday evening. This has forced Vijay Mallya-controlled Deccan to reverse its decision to hike fares on Friday.
“Deccan’s proposal to hike fares by 10 per cent has been put on hold so that its guests can continue to enjoy value flying,” said a spokesperson of UB group that owns the airline.
A senior SpiceJet official said no decision could be taken. Bruce Ashby, IndiGo’s CEO and president, did not take calls or respond to SMSs when this correspondent tried to contact him to get comments on any possible fare hike. Go Air officials also remained tightlipped.
Interestingly, another value carrier JetLite, a subsidiary of Jet Airways, has also not gone for any base fare hike. Instead, it has launched a discounted fare scheme to lure passengers.
According to budget airline officials, any fare increase at this juncture would affect the sentiment of flyers when jet fuel prices have only gone up by 3 per cent. “There need to be a difference in airfare as our models are totally different,” said an executive.
“It (resisting fare hike) is a temporary move. Eventually they (budget airlines) need to increase fares to cover cost,” said Ankur Bhatia, executive director, Birds Group which is into aviation and tourism consultancy.
He said, “A price war if any may benefit passengers, but in the short term.”
In 2006 and 2007, low-cost carriers started offering fares at dirt-cheap level forcing full service carriers to drastically cut fares to compete with them. Now that all airlines are saddled with mounting losses, the full service airlines are making an attempt to take the fares northwards.