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Feb 21, 2013 04:38 PM IST | Source: PTI

'Lowest' airfare war: Air India jumps into the fray

The war over air fares has intensified with all Indian airlines competing with each other to offer low ticket prices, as Air India also jumped into the fray.

The war over air fares has intensified with all Indian airlines competing with each other to offer low ticket prices, as Air India also jumped into the fray. A day after Jet Airways offered 20 lakh seats at Rs 2,250 for travel till the year-end and all no-frill carriers - IndiGo, SpiceJet and GoAir followed suit, Air India on Wednesday evening launched special fares offering a discount of up to 40 per cent on one-way regular fare charged by it on its domestic flights.

While official sources said the lowest fares had so far not breached the lowest rates given by the airlines to aviation regulator DGCA, Civil Aviation Minister Ajit Singh said, "We are not going to prescribe anything (fares). If we fix a lower bracket and the airlines charge lower than that, the issue will go to the competition council." Maintaining that the government would not regulate fares, Singh said a cell to monitor the fares was being set up in the Ministry and not to regulate them. "Whatever needs to be done will be done in consultation with the airlines."

Travel portals showed that Air India was offering the lowest fares on most of the major sectors. On the Delhi-Mumbai route, an economy class one-way ticket for mid-April was priced at Rs 3,201 by Air India, Rs 3,340 by IndiGo, Rs 3,350 by Jet Airways and Rs 4,426 by SpiceJet. The Delhi-Chennai sector saw an Air India ticket costing Rs 3,701, IndiGo's being Rs 3,840, Jet Airways' Rs 3,850, Jet Konnect's Rs 4,008 and SpiceJet's at Rs 4,714. A ticket on Delhi-Kolkata route cost Rs 3,201 for Air India, Rs 3,241 for IndiGo, Rs 4,662 for SpiceJet and Rs 4,663 for Jet Konnect. Similarly on the Delhi-Hyderabad, Air India's ticket was priced at Rs 3,201, IndiGo's Rs 3,290, Jet's Rs 3,350 and SpiceJet's Rs 4,641.

Asked whether DGCA would warn airlines against indulging in predatory pricing of air tickets as it had done when Kalanithi Maran-owned SpiceJet had offered ten lakh seats at Rs 2,013 for a limited period, the Civil Aviation Minister merely said the fares would not be regulated and made more transparent. After the SpiceJet move to slash fares last month, the aviation regulator had urged other airlines not to follow suit as such a practice could be harmful to their financial bottomline that was already in trouble.

Vikram Malhi, Country Head of travel portal Expedia, said the drop in fares would help airlines fill up their seats and increase their load factors. Observing that an average of between 20-25 per cent of seats went vacant on each flight, he said the airlines are aiming to fill up these seats and bolster traffic on weaker routes. Malhi said the earlier low fare offering by Spicejet had a booking window of three days which was "too short" restraining all tickets on offer to be sold. But the latest offer of Jet was "open for a longer period of six days for travel throughout the year" and, therefore, was likely to see higher response from travellers.

Through this measure, industry sources said Jet was seeking to attract passengers away from its rivals and raise an immediate cash buffer of about Rs 400 crore. The high airfares throughout last year, caused primarily by the grounding of Kingfisher Airlines, had led a substantial chunk of passengers to opt out of air travel. This had led to negative growth in traffic for the first time since 2009. But the recent low fare offers by the airlines could lead to attracting these air travellers back to flying. The sources said the dip in fares would also help airlines to fill in the extra capacity they have introduced by getting new planes.

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