Air India Leads Fare War. Will this be a hit with the fliers ?

August 8, 2016.

Air India has been working hard on ways to revive its fortunes, reduce expenses and expand services. Air India is estimated to have posted an operating profit of Rs 80 million in 2015-16, mainly helped by steep fall in jet fuel price.

Air India chief Ashwani Lohani, who is about to complete one year as CMD Air India, has asked AI employees to stop presenting him with bouquets and do away with “petty courtesies” while ensuring that minimal number of officials are present to see him off at airports.

Air India has already barred its officials from using luxury cabs while travelling within the country.

The Civil Aviation Minister Ashok Gajapathy Raju said during Question Hour in Rajya Sabha, “After many years, this is the first year that Air India has not made an operating loss. It is going in the right direction and I think if this effort continues, it will be an airline we will all be proud of.”

Observing that Air India, despite its massive loans, is trying to stay afloat, he said, “Its financial status is fairly precarious. It has got a lot of loan. Historically it has come to it and they are doing their best to keep it afloat and to see that it performs second to none. We of course would like Air India to survive. So we are trying that on the government side and we are supporting it.”

Against such an optimistic backdrop, National passenger carrier Air India is now in the lead of the ongoing Air-fare war in India. It has announced a populist scheme : “Monsoon Sale”.

Sacrifice luxury, observe austerity, lure customers by offering discounts, & thus fill vacant seats. Air India now seems to have learnt its lessons.

Air India has announced discounts on select sectors in the economy class for travel on both domestic as well as on the international sectors. Air India cited that the offer can be availed on more than 250 domestic sectors for travel between August 22 and September 30, both days inclusive. It said in a statement:

“Under this offer, available from 9th to 15th August 2016, Air India flyers can book tickets at amazingly low fares starting at INR 1,199/- (all-inclusive one-way fare) and INR 15,999/- (all inclusive) on its select domestic and International sector respectively. On the International network, the sale is valid on select return flights (ex India only) for a travel period from September 15th to December 15th 2016 (both days inclusive) for commencement of journey.” “

Other airlines in India are also forced to follow Air India. Various other airlines have also announced discounted fares to attract flyers during the lean travel season. The periods between January-March and July-September are considered to be lean travel seasons. Airlines have to offer these kinds of special fares not just to increase load factors, but also to stimulate demand, during the lean seasons.

Will these promotions be a hit with the fliers ?

Budget passenger carrier SpiceJet too came out with discounted air fares under its “Great Independence Day sale” scheme.

SpiceJet said under this scheme, it will offer one-way fares as low as Rs 399 base fare (surcharge and taxes extra as applicable) for travel to select destinations on its domestic network and the international fares start at Rs 2,999 base fare (surcharge and taxes extra as applicable) for non-stop direct flights.

According to SpiceJet, the three-day sale will be open till midnight August 11 and the travel period covered is from August 18 to September 30. The airline added that it is also offering attractive fares on various direct flights across the network. As a caution, SpiceJet said, “There is limited inventory under the offer, and seats will be available on first-come, first-served basis. Sales fares are not applicable on group bookings and cannot be combined with any other offer. The offer is applicable only on non-stop flights and fares vary from sector to sector depending on the travel distance and flight schedules.”

Another LCC IndiGo announced its discounted air fares offer starting at Rs 806 for travel on its domestic network. It should be noted that IndiGo had earlier said that its average fare costs INR 

The timing of such announcements coincides with a long rakhi weekend coming up. India’s Independence Day is just around the corner. It is a great time for a quick getaway for Indian air travelers. 

Curious Flyer Staring at Problem of Plenty

Airfares have become cheaper because of low fuel prices and competition between domestic airlines.

Intense competition among airlines has now become the flyer’s gain; the customer now has plenty of options to chose from.

Travelers become the big winners as battle for the skies heats up.

In 2015, last minute air tickets were nearly 50% costlier as compared to those in 2016. Today, there is an intense competition amidst airlines, excess capacity and lower fuel prices.

Yatra analysed the fares and came out with a conclusion that average fares for travel on all dates between June 29, 2016 and July 4, 2016, when booked on June 28, 2016, were cheaper by up to 50% as compared to fares booked during the same time last year.

“We are seeing a significant drop in airfares across sectors and this can be attributed to a reduction in oil prices by over 20% on a year-on-year basis, as well as a 7-8% increase in passenger capacity by the airlines. The drop in airfares has resulted in strong passenger demand which is up by 22% this year, resulting in increased passenger load factors and improved financial health of the sector as a whole,” Yatra president Sharat Dhall.

Typically, the monsoon season in India is a lean period for airlines as schools open after summer break. To beat the lean season, June to September, and attract more flyers, Indian budget carriers, including GoAir, IndiGo and AirAsia have come up with attractive discounted airfare offers beginning July to September. They have no other option to fill their excess capacity. It may be noted that the break-even point for an airline requires 70-80% passenger load factor. An aircraft flying with its seats just 70% full becomes a big liability for the airline. Not flying is a bigger liability, since even a grounded aircraft demands maintenance expenditure, lease rentals, and finance costs.

As a result, these airlines are seen competing against each other in offering discount schemes during the lean season. The smile returns on the flyer’s face. His range of choices expands and wonders – which flight, which airline, what price ! 

However, the government has revised the ATF prices by 4.9-5.7%. The revised prices of ATF in Delhi now stand at Rs 49,287/kl from Rs 46,729/kl. With this, ATF price has increased by 23% since January 1, 2016 and is now the highest since July 2015. Low ATF cost helped airlines during most of 2015. Now, this steep increase in 2016 will significantly weigh down their earnings.

This is the time when domestic and international travels are slow and in order to encourage leisure travelers to go on a short vacation, airlines have to offer such fares. The discount normally ranges from 15 to 20%.

Almost all low-cost airlines are presently trying to attract passengers by getting into heavy discounting, and this will most likely continue in the coming few months.

GoAir has announced a monsoon bonanza with ticket prices as low as Rs 849 (base fare plus surcharge). Offer started on June 29 and will last till July 2, 2016, and is applicable for travel between July 1 and September 30, 2016.

India’s biggest airline IndiGo has announced a promotional offer with fares starting as low as Rs 1,106 (all inclusive). Booking period is between July 1 and September 30th and is applicable only on domestic routes.

AirAsia India has also launched a promotional offer. It is the exclusive ‘Fly like a Superstar’ promotion. Booking period June 27 – July 3. Travel period between February 1 and April 30, 2017. Fares starting at Rs 786 (all inclusive) for one-way trip to select domestic locations.

Apart from the promotional fares to all domestic destinations in India, low fares are also available to other international cities such as Auckland, Mauritius, Guangzhou, Krabi, Lombok, Ho Chi Minh City, Siem Reap, Penang and many other cities at Rs 2999 one way.

Amar Abrol, CEO, AirAsia India said, “Now everyone can fly like a superstar in and out of India. The excitement around “Kabali” has enabled us to unveil movie-themed activities and we are pleased to offer special promotional fares that will allow AirAsia guests to ‘Fly like a Superstar’ to their favorite destinations in India & beyond.”

Earlier, IndiGo had launched promotional fares starting at Rs 789, all inclusive. On IndiGo’s website, the lowest fare of Rs 1,106 is for the Srinagar to Jammu route, while Delhi to Mumbai Rs 2,749, tickets on Delhi to Lucknow are available at an all-inclusive fare of Rs 1,500 (all-inclusive), Ticket from Ahmedabad to Mumbai costs Rs 1,200 (all-inclusive). IndiGo has not however disclosed the number of seats on offer under the promotional scheme.

“However, there is also a catch here, the discount is on the basic fare and that at times could be low. Finally, the discounts do get sold out early so it is advisable to book early, John Nair, Head, Business Travel, Cox & Kings Ltd said.

Imphal – Guwahati flight now at Rs 829 from IndiGo

Special low airfares are pouring in ahead of the monsoon season with another domestic carrier rolling out cheaper air tickets to woo fliers during the lean travel season

India’s biggest airline in terms of market share, IndiGo has announced tickets as low as Rs 829 (all-inclusive) as special low fares rain in ahead of the monsoon season.

Imphal valley

The said lowest fare of Rs 829 under the offer is for Imphal-Guwahati route. Among other routes, tickets on Delhi-Mumbai sector are priced at Rs 2,486 and Delhi-Chennai at Rs 3,338.

The IndiGo offer is for travel between between July 1 and September 30, 2016 and is applicable only on domestic routes.

IndiGo thus joins the ongoing air fare war.

Typically, two quarters of the year – July-September and January-March – are considered lean seasons in terms of travel demand during which airlines offer low ticket prices to fill the empty seats in their aircraft. Airlines come up with several types of discount offers to lure flyers.indigo_356x200_4752_356

Special low airfares are pouring in ahead of the monsoon. Many other airlines like GoAir, Jet Airways and AirAsia India are also offering discounts for monsoon season travel.

Jet Airways, for example, in order to woo fliers has offered special low fares during the lean period.

jetIn its “GetMore” scheme, Jet Airways is offering fliers a 20 per cent discount on business and economy class base fares for a limited period on its domestic network.

Jet Airways in a release said the promotional fare will be applicable on tickets booked between June 2 and June 6 for travel between June 25 and September 30.

“The five-day #GetMore offer will allow flyers to avail substantial savings of up to 20 per cent on base fares. It will be valid on all direct flights across Jet Airways’ extensive domestic network,” the Jet Airways release said.

The Jet Airways offer comes after other domestic carriers – Air India, IndiGo, SpiceJet, GoAir and AirAsia India – announced similar sachems for customers recently.