Low-Cost Carriers to Slash Ticket Prices

Tuesday, 5th February 2013 at 02:42am

The price of airfare of a rival airline is almost always the deciding factor of an airline whether or not to drop its own ticket price or match to even the competition. However, the price adjustment would always be dictated by the market demand and the economy of the operations.

When SpiceJet slashed its ticket price in a mega sale recently, it had caused alarmed by other local airlines, albeit mutedly. Though they didn't put up a mega sale of their own, they managed to draw customers when they also dropped their respective ticket prices.

Air India, for example, quickly reacted to SpiceJet's move by slashing its own ticket prices, matching the prices in each route serviced by a trio of low-cost carriers. Air India is aiming its move at the rival Jet Airways, also a full-service airline.

Other airlines such as IndiGo and GoAir, for sure, would make sure to protect their respective market share and might also be slashing ticket prices too. SpiceJet might even bring its fares down further to match other carriers' prices. One travel executive said that, in the end, the passengers will benefit the price war as it enables them to fly the cheaper way. The passengers would naturally opt for the best value for their money and that would be the full-service airlines, such as Air India, which offer better inflight services like meals and entertainment.

Industry experts opine that the more established Air India doesn't want to see its market share going to its rivals and it will do whatever it takes, more aggressively, to keep its position. Its market share improved in 2012 to 21% up from 14% the previous year.

They predict that in the coming days or months ahead, a further price reduction from low-cost carriers is imminent to upset AI's current offerings. Everybody is not going to be outdone so there seems to be no end in sight for this current price war.

Air India, however, was quick to say that its airfare reduction was triggered by Jet Konnect's recent move when it slashed down its ticket prices on 20 routes to compete with fellow budget carriers. It is a natural response for other carriers to counter the others' strategy in order to survive the competition. A senior AI official said that they are only slashing airfare on six routes, all of which are metro routes.

According to forecasts by travel agents earlier this year, air travelers would witness a battle royal among local airlines in 2013 as each would scramble to protect their market shares, allowing them to engage in intense price war.

The cheaper the tickets, the more people want to travel by air. The volume of air passengers in 2012 went down by as much as 3.04% or 588 lakh against the 2011 figure which was 606 lakh.

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