Aggressive competition forces Indian to reduce fares

New Delhi: Faced with aggressive competition from low-cost airlines in the past six months, Indian has been forced to drop its price line, in some cases even lower than the low-cost airlines.
"We haven't been able to fill up the aircraft at higher fares. Every time we've upped fares, forward bookings have fallen. Plus, customers have come to expect lower fares, thanks to the deals from low-fare carriers," said a senior official from Indian on condition of anonymity. Three months ago, Indian was merged with Air India to form National Aviation in the search of better economies of scale.
But to make matters worse, airline capacities have gone up by 35% in the past one year. While traffic, too, has grown during the same period, airlines have been under constant pressure to fill the demand-supply gap.
Speaking on behalf of travel agents selling Indian tickets, Madhav Oza, a Mumbai-based consolidator, says with its new fleet, the airline should have been able to go in for higher revenues. Indian is currently in the middle of a massive $2-billion fleet-induction programme to bring in 43 new Airbus planes. However, it has completely failed to capitalise on this.
There is very little advertising on the new planes or service quality, and not too many people even know how many of the new planes are part of the fleet.
10/11/07 Deepshikha Sikarwar/Economic Times

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Categories: Air India Domestic Nov 2007, NACIL Nov 2007