Gulf fares set to fall from Jan

New Delhi: Flyers on the Indo-Gulf sector could not have asked for a better bargain.
It is estimated that fares on the Indo-Gulf routes would come down by 10% in view of the extra capacity that would be inducted by the Naresh Goyal-owned airline when it launches services to the Gulf next January. Till now, bilateral rights for the lucrative Gulf sector was reserved for Air India.
The highly profitable Dubai, Abu Dhabi and Saudi Arabia routes still continue to remain reserved for Air India, at least for now.
The decision to allow Jet to fly to the Gulf comes at a time when the government is considering a proposal to allow all airlines, including start-ups, to fly on overseas routes if they fulfil minimum capitalisation and fleet size criteria. Private sector players like Air Deccan and Kingfisher are pushing for early opening up of overseas routes, but Jet is said to be wary of increasing competition.
Considering the high demand in the Gulf routes, most analysts expect fares to stabilise in the long run after a drop.
In the Gulf sector, the stakes are high for national carrier Air India which, along with Air India Express, commands almost 45% of the Indo-Gulf market, accounting for up to 50% of the company’s cash flow. The remaining part of the Gulf pie is shared by the Gulf-based airlines.
“The entry of Jet would have an impact on our profitability,” conceded a senior Air India official. To protect its turf, the flag carrier now wants to deploy additional capacity on the Gulf routes in sectors such as Dubai, Abu Dhabi and some destinations in Saudi Arabia. The pressure on fares would be more if Jet decides to deploy its value-carrier JetLite (the re-incarnation of Air Sahara) in this segment.
15/09/07 Economic Times

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Categories: Foreign Sep 2007, General Aviation Sep 2007, Jet Airways Sep 2007, New Sep 2007