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Is this the start of another price war in Indian skies?

Airlines are trying to attract passengers to fill seats that may have otherwise gone empty due to rising concerns over the spread of Omicron, experts said.

December 30, 2021 / 05:14 PM IST
Representational image.

Representational image.

A fresh airfare war appears to have broken out in Indian skies after almost two years as airlines seem determined to prevent the grounding of their fleets or flying near-empty aircraft amid uncertainty over the pandemic.

Travel demand was strong in December, with daily passenger traffic rising to 380,000, which was about 98 percent of the pre-pandemic levels. However, forward bookings were weak as people reconsidered travel plans in the wake of the rise in Omicron cases and curbs by state governments, experts said.

Additionally, the January-March quarter is a relatively less busy season for non-business travel.

GoFirst, formerly GoAir, kicked off the price war on December 22, offering a 20 percent discount for double-vaccinated passengers on domestic flights for tickets booked on the airline’s website or mobile app. The discount is applicable for travel 15 days after the booking date.

SpiceJet followed, offering all-inclusive, one-way fares starting at Rs 1,122 for bookings made from December 27 to 31 on routes such as Chennai–Bengaluru, Bengaluru–Chennai, Chennai–Hyderabad and Jammu–Srinagar.

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AirAsia India and IndiGo came out with similar discounts within a day. IndiGo announced a five-day year-end sale offering all-inclusive fares on domestic routes starting at Rs 1,122. The December 27 to 31 sale is valid on travel from January 15 to April 15.

Price bands

The fare wars are the first since September, when the government said price bands would apply for travel only within 15 days of booking instead of 30 days earlier. However, airlines had stated they would not indulge in predatory pricing because they wanted to improve their operating margins after two years of enduring pandemic-induced pressures and high fuel costs.

Experts said advance booking fares were slashed to fill seats that may have otherwise gone empty due to rising concerns over the spread of Omicron.

Apart from discounts, airlines are also allowing passengers to change tickets up to three days before their flights free of cost. Airlines are also offering refunds if flights are cancelled due to travel restrictions imposed by the government.

“The floodgates have opened up once again. Airlines are looking to lure passengers and are working to ensure that there is no fall in air passenger traffic after nearly two years of the pandemic,” said Sanat Kaul, chairman of the International Foundation for Aviation Aerospace & Drones.

He said airlines in India will ensure that safety precautions are followed to avoid another Covid-19 wave and will not be content with just waiting again.

“Airlines in India are affected by not only low passenger load factors at the moment but are also facing the brunt of high jet fuel prices. While they cannot control fuel prices, they are trying to maximise their load factors before major travel restrictions are announced,” said a senior aviation analyst from Goldman Sachs.

Will the price war last long?

Domestic airlines have announced discounts only for a limited period. If India avoids a third wave, they will likely come up with offers again to attract travellers, experts said.

“A large section of the Indian population is now vaccinated and it’s about time that we start learning to return to our pre-pandemic lives while taking precautions,” an official from a domestic airline said.

The official said there is a lot of pent-up demand for travel as people have been forced to stay put for almost two years and the travel sector is trying to tap that potential.

An official from another airline said that carriers have suffered huge losses due to the grounding of fleets for prolonged durations and they can no longer afford to make losses when new players are entering the segment.

Experts said that in the absence of travel restrictions over the next few months, Indian airlines will most likely continue to match the low prices offered by any carrier so that they do not lose passengers.

“Corporate travel is still restricted and leisure travel keeps getting hit due to the pandemic…. airlines will have to resort to discounts and offers to attract customers,” an official from a domestic aviation consultancy said.

The official said that with the entry of Akasa Air and Jet Airways 2.0 and with the Tatas taking over Air India, the price wars may only intensify by the summer of 2022.
Yaruqhullah Khan
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