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Club Mahindra Top Story | 01/07/2012 @ 12:42 PM

Airlines take to discount route to beat lean season

Moneycontrol Bureau

Come January and all major airlines have to brace for a lean season which extends till March. But nevertheless, Jet Airways, Kingfisher Airlines, SpiceJet and their competitors have already fine-tuned business strategies to attract customers. Form offering ‘buy one get one’ to ‘cash back’ offers, airlines are trying their luck at every possible marketing gimmick to fill up seats.

“Declining domestic air traffic has hit airlines hard and hence they are forced to introduce these temporary offers. Ticket prices have dropped due to the lean season and airlines feel the need to attract more passengers since many may have opted to travel by train,” says Subhash Goyal, president of STIC Travel Group.

Meanwhile, these carriers which had a flight occupancy of nearly 100% in the Oct-December period are now struggling to scale up their passenger loads which are hardly inching to 50% these days.

“Our yields were anything between Rs 6-8 in the Oct-Dec period, which is up 10% year-on-year. But now our bookings have dropped over 30% and our yields are under pressure,” says a sales executive at Jet. Yield is the revenue an airline earns per passenger per kilometer.

Jet seems confident of earning atleast Rs 2,000 crore from passengers in the December quarter when compared with Rs 1,541 crore which it earned in the corresponding quarter last fiscal. But the airline industry is highly cyclical in nature and seasonal fluctuations in traffic often reduces their cash balance during off-peak period which has just begun.

Hence, to fulfill its short-term cash requirement airlines take to discount route. Jet has quickly announced an advance purchase scheme by which if a traveler books a seat 21 days in advance, he will get the lowest fare by any standards. Kingfisher too has a great saver scheme in which you save around Rs 1,500 on a Mumbai-Delhi return fare of around Rs 7,500. SpiceJet too is offering a discount upto Rs 1000 on fares which are already 60% lower then what they were a month ago. Similarly, online booking engine makemytrip.com is offering a round trip ticket free on purchase of a ticket of same denomination.

But these offers can be tricky cautions Iqbal Mulla, president, Travel Agents Association of India (TAAI) “Airlines have different discounts if booked 30, 21 or 15 days ahead of the departure date. One has to be really sure of making that trip on the date reserved as cancellation charges can be as high as 50% of the fare, if booked through the available offers.”

Did You Read:Limited downside seen in Spice Jet, Jet Airways: Tulsian

Shaheen Mansuri
shaheen.mansuri@network18online.com

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