New year rings in fare war in the skies

NEW DELHI: The new year is seeing its first fare war in the skies. Following GoAir’s flat fare of Rs 1,075 (including taxes and surcharge) on the Delhi-Jaipur route, another budget carrier SpiceJet is planning to slash fares to match the competition.

IndiGo has already launched a promotional airfare of Rs 500 plus taxes across all sectors, albeit for a limited period.
“We are already offering Rs 500 basic fare on various sectors. Keeping in mind the ongoing lean season, we may further slash it but no decision has so far been taken on this,” SpiceJet chairman Siddhanta Sharma said.

“January-March is usually a not-very-exciting period as compared to the previous quarter,” he added.

The airlines’ move is largely being attributed to overcapacity built up by them and people avoiding air travel due to fog-related delays.

“In the first 11 days of this year, the growth in the aviation sector is in single digits. During this period, airlines have added 8% capacity to their fleet size,” Ankur Bhatia of Amadeus, a leading travel technology player in India, said.

On account of the fare war, largely initiated by the country’s largest budget carrier Air Deccan for grabbing market share, domestic carriers lost about Rs 2,000 crore in 2006-07. With consolidation taking place in the domestic skies, airfares have recently moved up.

Recently, when the price of crude fell to $ 90 a barrel from $ 99, it was felt that airlines would slash the fuel surcharge due to a possible cut in the price of jet fuel, but no carriers did so. The airlines said that they would go ahead with a cut in fuel surcharge only if the fuel price remains at that level.

Almost all the domestic carriers, including Jet Airways and Air India, are trying to increase their non-passenger revenue such as income from advertisement, cargo and in-flight sale of merchandise.