Low-cost airlines are getting pummelled aft and fore

Low-cost carriers (LCCs) are under attack from both sides - from the full service carriers (FSCs) as well as the Railways. Jamshed Dadabhoy, aviation analyst with Citigroup, said while on the one hand the gap between the average fares of full-service carriers and low-cost ones is narrowing, on the other it is widening between the latter and the Railways.
Clearly, both full-service carriers and the Railways are cutting ticket prices in a bid to wean away passengers.
The cut in basic fares of the former has been deeper than that of low-cost airlines, Dadabhoy noted in a report on May 18.
"Another point to note is that low-cost carriers were already offering low basic fares in January, hence the reduction in basic fares on an absolute basis has not been as dramatic as for full-service carriers" he wrote.
SpiceJet executive chairman Siddhanta Sharma agrees. "Train fares (for 2nd AC) on short-haul sectors are travelling closer to ours. Also, as full-service airlines slash their basic fares, the chasm in fares is slowly closing."
But an executive with a full-service airline, who did not wish to be named, refuted the Citi report.
26/05/08 Praveena Sharma/DNA MONEY/Sify

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Categories: Low Cost General May 2008