Airlines in new fare war, seats cheaper by 75%

Tags: News

SpiceJet starts super-sale for summer travel, others follow

Kalanithi Maran-promoted low-cost carrier SpiceJet has reduced fares for the third time this year, triggering another fare war. GoAir followed suit within hours of the SpiceJet announcement.

Quick searches on the websites of IndiGo, Jet Airways and Air India showed discounted fares for the same period, though none of them has officially announced any fare cut.

Unlike the earlier offers meant to increase occupancy during the lean period from January to March, the current offers are for tickets sold for travel between April 1 and June 30, the peak summer season when schools and colleges have their vacations.

The SpiceJet offer is for a three-day booking window valid from February 24 to 26. While SpiceJet is offering up to 75 per cent discount on base fare and fuel surcharge, GoAir’s summer travel offer starts at Rs 1,726.

Vikram Malhi, GM for South and Southeast Asia at AirAsia-owned travel agency Expedia, said, “Flash sales have become a regular feature in the first few months of the year. Besides stimulating demand, they prompt people to plan their travel in advance. The Indian consumer is evolving and seeing the pattern since last year, and has begun to expect such discounts more often. Typically, what we have observed so far since last year is that whenever an airline has cut fares or offered discounts on advance booking, other carriers too have matched that pricing to retain market shares.”

Industry experts said an explanation for the SpiceJet offer could be that the carrier had become cash-starved. It reported net loss of Rs 172 crore for December quarter compared with Rs 102 crore profit for the same period of the previous year thanks to forex losses and high fuel costs.

The airline in a statement said such sales were part of its plans to provide the seats that would otherwise go empty to passengers at highly discounted advance purchase rates, creating a win-win situation for both the airline and passengers. Under the latest offer, customers can get between 35 per cent and 75 per cent discounts on base fares and fuel surcharge relative to a ticket booked before seven days of travel.

Jet Airways, the only other listed airline, reported net loss of Rs 268 crore for the December quarter for the same reasons.

According to a report by the Centre for Asia Pacific Aviation (Capa), three carriers are expected to post combined losses in excess of $1.2 billion in FY14 and Air India, Jet Airways and SpiceJet are likely to report losses for the full year.

“These figures could rise even higher, as weak outlook for March may trigger further promotional pricing,” the report added.

“IndiGo will be the only carrier to report full-year profitability, but this will be significantly lower compared with our earlier estimates,” it said.

Indiver Rastogi, chief operating officer and head of corporate travel at Thomas Cook (India), said, “We are seeing interesting uptake of up to 20 per cent on sectors like Mumbai-Delhi and Mumbai-Bangalore. While this is merely the start of the three-day scheme, it is indeed a sharp strategy to give a fillip to consumer demand in a trough season. Tactics such as these do certainly have a positive impact, especially at the start of the holiday booking season.”

Neelu Singh, chief operating officer of Ezeego1.com, “The summer discounts are a pleasant surprise and tempting enough for customers to book their summer holidays at low fares. While most of the metro routes have seen air fares climbing, these fares are attractive for those planning travel to tourist destinations such as Goa, Kerala and Rajasthan, for which the return fares are as low as Rs 5,000-7,000.”

Sharat Dhall, president of Yatra.com, felt discounted summer fares would stimulate the market and leverage advance bookings for the forthcoming holiday season.

The discounts are attractive. For instance, the Delhi-Goa air ticket that otherwise sells for Rs 11,148, all inclusive, can be bought for as little as Rs 3,737 under this ‘all inclusive’ offer.

“SpiceJet is committed to leading the way in offering the most attractive fares to customers. We received overwhelming response from customers, who availed the earlier ‘Super Sales’ offer, for taking the lead in making air travel more affordable,” said Sanjiv Kapoor, chief operating officer of SpiceJet. “We have also been attracting many first-time air travellers, who would otherwise endure long train journeys or not travel at all,” he added.

(With inputs from D Govardan, Chennai)

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