IndiGo and SpiceJet Counter AirAsia Low Fare Offer

Monday, 2nd June 2014 at 07:14am

Seems like the true carrier war in Indian commercial aviation industry has just started with AirAsia's much-ballyhooed entry into the local Indian market through its local subsidiary, AirAsia India.

The entry of AirAsia in India, of course, was not met with a fanfare from rival airlines. On the contrary, it was met with indignation and protest from a group of well-established airline companies who claimed it (AirAsia India) violated the newly-amended aviation law in the country when it was formed to which the new carrier vehemently denied.

A day before AirAsia India will launch its inaugural flight, major rival SpiceJet preempts what could be a full-blown fare war by offering fare for as low as Rs1,499 for twin routes, Bangalore-Goa and Bangalore-Chennai. These are the routes that AirAsia India was to launch during its inaugural operation.

AirAsia, known for its ridiculously-low fare offer, was unperturbed by its rival's low-fare gimmickry. It counters with a Rs990 for the same routes, and even launched later a promotional offer of Rs5 for a base fare.

Last Saturday, sensing it will be left behind in the competition, IndiGo countered AirAsia India's base fare promo offer by offering Rs1 for the same routes. This is perhaps IndiGo's most aggressive stance ever to counter its rivals.

Surprisingly, SpiceJet didn't match the two airlines single-digit base fare war. Perhaps losing steam in the competition this early, SpiceJet vented its frustration on social media through Twitter criticizing AirAsia India's base fare offer of Rs5, especially during a peak season, as predatory, dangerous, and disruptive. The airline clarified that it didn't and doesn't have plan to join in the single-digit base fare war in peak season.

Ironically, SpiceJet introduced to India the Rs1 fares a few months earlier.

Some experts suggest that it is hard for AirAsia India to break even during the first four months of operation with such staggeringly-low base fares. India is a different market and AirAsia should realize that. India is already a saturated market for low-cost travel with the presence of three big low-cost carriers often offering heavily-discounted tickets to gain market share, fill empty seats, generate much-needed cash or simply respond to competition.

The good news for AirAsia India's entry into India is the fast take-up of its base fare promo that, according to a booking site, the volume of booked tickets for Bangalore-Goa and Bangalore-Chennai routes skyrocketed up to 20 and 35 times respectively.

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