AI cuts basic fare up to 82%

Close on the heels of Kingfisher and Jet Airways announcing basic fare cuts of around 40 per cent, national carrier Air India has decided to slash the same by 35-82 per cent across all sectors. With this cut, the total fare in any given sector would come down by at least 25 per cent.

Today, JetLite also announced a fare cut of around 40 per cent across all sectors, while low-cost carrier SpiceJet launched a special advance booking at Rs 99 basic fare. SpiceJet’s offer, which will be there till June 2009, means up to 80 per cent cut in basic fare and a 25 per cent cut in total fare.

“Following the gradual reduction in the price of ATF, Air India was the first airline to pass on the benefit to passengers with a reduction in fuel surcharge in early December. Passengers will thus benefit for the second time with a reduction announced by the airline, this time with deeper cuts,” said an Air India statement.
 

NEW YEAR GIFT
Sector	Basic Fare before reduction (in Rs)	Basic fare after reduction (in Rs)
Chennai-Bangalore	1,100	200
Chennai-Hyderabad	1,100	400
Bangalore-Hyderabad	1,100	250
Hyderabad-Mumbai	1,100	400
Bangalore-Mumbai	2,475	1,200
Delhi-Mumbai	3,300	1,675

In a bid to stimulate demand for the short-haul flights, both Air India and Jet Airways have offered rock bottom fares for routes like Chennai-Bangalore and Delhi-Udaipur, decreasing fares by around 75-80 per cent. While Air India’s basic fare for Chennai-Bangalore has come down from Rs 1,100 to Rs 200 now, Jet’s Delhi-Udaipur fare has come down from Rs 2,000 to Rs 500.

The cut in basic fares for routes such as Bangalore-Mumbai is around 51 per cent. Air India’s basic fare for the route has come down from Rs 2,475 to Rs 1,200.

Airlines said that lower fares have had an instant effect on passengers and bookings have soared by as much as 70 per cent compared to yesterday. “We have had to offer some lower fares since we saw February and March going really slow in terms of bookings. But after the lower fares were launched, our overall bookings have gone up by around 70 per cent today compared to yesterday,” said SpiceJet CEO Sanjay Aggarwal.

However, customers as usual will have to hurry since less than 10 per cent of the entire inventory of an airline will be on offer at these lower fares.

Day before yesterday, Kingfisher made a similar announcement of slashing fares from January 1, though it did not specify how much the fares would come down by.

ATF prices, which account for the single-largest chunk of an airline’s costs, have come down by more than 50 per cent compared to August prices. ATF currently accounts for less than 40 per cent of an airline’s costs compared to 50 per cent around three months earlier.