Air India Low Fares Threaten Low Cost Airlines

Following Air India's fare reductions by up to 20% on certain internal flights this year, competing low cost airlines are seeing the effect as they face the prospect of taking a hit on their profits.

The Airlines move to lower fares came in order to combat its falling market share.

The move comes at a time when oil prices are seeing record highs having a huge influence on operating costs.

The national carrier, Air India, have the largest fleet in India, yet they were recently by low-cost airline IndiGo in terms of market share.

According to analysts, the incentive has already had an impact in the January-March 2011 quarter: "Air India has dropped fares in the last quarter by 20-30%. This has forced other airlines to follow suit. With fuel costs up by more than 40%, this drop in fares by Air India has become a game-changer for the fourth quarter of the past financial year," said Kapil Kaul , CEO of Indian subcontinent & West Asia, Centre for Asia Pacific Aviation.

Meanwhile Air India's announcements are not all good for the passenger, as they just announced that they will be reducing the baggage allowance of economy class travelers by 10kg per passenger.

The decision came into effect for all tickets purchased from Tuesday, April 11, for travel dates between the peak travel season of June 1 and July 31.

Economy class passengers will now be allowed to check-in only 30kg, whereas they used to be able to carry up to 40kgs.

Joy Thomas from Al Ahli Travels told 'Emirates 24|7' that the decision has been taken because of the peak travel season for two months starting June.

Wednesday, 13th April 2011 at 12:48pm