Airlines clip fares to spread wings

Air India, IndiGo, SpiceJet, GoAir slash rates as lean season begins; more may follow

Airlines have begun dropping fares in advance purchase offers, as the next two months are a lean season for travel.

On Tuesday, SpiceJet launched a three-day sale, offering a 50 per cent discount on fares for travel at least 30 days from the booking date.

IndiGo has cut fares but not issued any circular for agents. GoAir has reduced fares by about 20 per cent, sources said.

Air India, too, has joined the race and dropped fares by 50 per cent. Its discount sale will commence from Wednesday and would run till Friday midnight.  The company said it would be offering fares as low as Rs 1,385 (on the Kolkata-Agartala route) under the scheme.

Jet Airways is still to act. Among international airlines, Qatar Airways is offering a 30 per cent discount on economy and premium cabin fares, in a limited sale offer.

Basic fare, fuel surcharge and common use terminal charge  make up a little over 85 per cent of the total fare on the Delhi-Mumbai and Delhi-Bangalore routes.

For travel in March, when discounts are available, the percentage of basic fare, fuel surcharge and common user terminal charge is 72-75 per cent on the same routes.

“The period between mid-February to end-March is a lean season. Average loads during this period are 65-70 per cent, much less than the required  breakeven seat factor of 75-80 per cent. The low fares will stimulate the market and help in forward bookings. This will also help airlines to improve network load, as certain flights have poor occupancy levels,” said an airline source.

Sharat Dhall, President of online portal Yatra.com  said, “SpiceJet and IndiGo slashing air fares for advance purchase across sectors is an attempt to garner early bookings for the coming summer season. SpiceJet is offering fares as low as Rs 3,579 for the Mumbai-Delhi route, where the spot fares are as high as Rs 10,098. With other airlines likely to follow, travellers are finally getting a respite from high fares and will take advantage of these to book holidays in advance. We are seeing a 250 per cent rise in bookings within hours of the prices being reduced. We expect this to go up further as word about the offer spreads.”

According to John Nair, head—business travel, Cox & Kings: “This tactical offer is aimed at those undecided on their travel plans over the next three months. It induces them to book to take advantage of the deals, as it comes just before the onset of summer, which is peak travel, when fares will climb. Definitely, others will follow; it’s good news for travellers.’’   

Vikram Malhi, general manager of Expedia said, “We saw such slashes last year across the first quarter and can expect more such offers in the near future. However, the cut is not as deep as last year.”

The three-day sale is SpiceJet’s second discount offer in a month. Last month, it was offering seats at a discount up to 65 per cent, with the lowest fares available 90 days from the booking date. Last year, too, the airline had taken the lead in discounting. It had put on offer seats at Rs 2,013 in a limited offer.

Airline executives say unlike last year’s offer when a single fare was available on all routes, the current discount offers take into account the sector distance.  Also, last year’s offer was a seven-day advance purchase offer; now, it is a 30-day one.

Domestic air traffic up in ’13
Domestic airlines  flew  over 61 million passengers in 2013,  growth of 4.4 per cent over 2012. In 2012 airlines flew 58 million passengers, according to data from the Directorate General of Civil Aviation.

Air traffic dropped  by over two per cent  in 2012  in comparison to 2011 due to rise in fares and user fees at various airports. Capacity growth  too had fallen  to 0.3 per cent in 2012 from 16.2 per cent in 2011.