With lean flying season ahead for next few months, airlines are lining up discounts to spur demand.
According to the travel industry insiders and agents, while IndiGo is offering domestic and international fares starting from Rs 899 and Rs 3,399 respectively, SpiceJet is selling tickets priced Rs 1,249 onwards.
A communication shared by IndiGo with travel agents and frequent fliers read, “Valid on limited seats and applicable on bookings made 15 days before travel”.
Similarly, AirAsia is trying to lure domestic and international passengers with fares which starting at Rs 1,079 and Rs 4,179 respectively.
Debt-ridden full-service carrier, Jet Airways which struggling for survival, is also offering discounts of up to 50% on certain routes.
Gulf-based Qatar Airways, too, has joined the bandwagon, offering 25% discount on business-class fares and up to 35% off on economy-class fares.
The discounting by the airlines comes at a time when India’s domestic traffic witnessed its slowest increase in 16 months, rising 13.3% in November compared to the corresponding period of the previous year.
“It’s a normal marketing trick adopted by the airlines globally to lure passengers during the lead period,” said Iqbal Mulla, chief counsel at Global Tourism Council (GTC), a Mumbai-based tourism consultancy firm.
According to the analysts, low fares are likely to continue as airlines continue to expand their capacities.
For example, market leader IndiGo which had 189 aircraft (177 A320s and 12 ATRs) at end of September 2018, now has a fleet size of 206 comprising 191 A320s, 14 ATRs and one A321.
Similarly, rival SpiceJet has added 12 aircraft from the second quarter and expects to make losses. The carrier currently has 73 aircraft, up from 61 in September 2018, as Max (Boeing) deliveries gather momentum.
“We are factoring a 3% decline in fares in the third quarter of this fiscal (significant improvement from around 11% decline seen in the preceding quarter),” said a report released by ICICI Securities on Thursday.
“For Q3FY19, we factor 19% capacity growth, 11.5% passenger growth and fare growth of 4% on year-on-year basis,” the report adds.
According to a recent Icra note, while the domestic passenger growth continues to be robust, supported by an under-penetrated aviation market, growing economy and rising population, the challenges are equally confounding as airlines resort to predatory pricing to maintain their passenger load factors (PLFs) in an environment of increasing capacities. This has resulted in deterioration in the industry economics, and thus, financial stress.
Over the last two years, four airlines (Air Carnival, Air Costa, Air Pegasus, Zoom Air) have already suspended their operations. Kinjal Shah, vice president and co-head, Corporate Sector Ratings, Icra, earlier said, “The overall debt levels in the industry remain high and would require equity infusion to bring the same to reasonable levels. Icra believes an equity infusion of Rs 35,000 crore would be needed over the next three-four years. In the near term, the balance-sheets of Indian carriers are expected to continue to remain stressed until the carriers are able to reduce their debt burden through a combination of improvement in operating performance and/or by way of equity infusion.”
FLYING IN FORMATION
- IndiGo is offering domestic and international fares starting Rs 899 and Rs 3,399 respectively; SpiceJet’s fares start at Rs 1,249
- AirAsia is trying to lure domestic and international passengers with fares which starting Rs 1,079 and Rs 4,179 respectively
- Debt-ridden full-service carrier, Jet Airways which struggling for survival, is also offering discounts of up to 50% on certain routes
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