Low-cost carriers should not raise fares: Gopinath

New Delhi: The pioneer of India's low-cost airlines G R Gopinath said budget airlines are flying themselves out of business by raising fares and sacrificing passenger growth.
Gopinath's statement runs contrary to plans of most of the country's low-cost carriers, including Air Deccan, the country's largest budget airline that he sold to Kingfisher Airlines last year for $135 million.
The only result of this strategy, he said, was that airlines were eating into each others' market share instead of growing the market.
"It's a shortsighted strategy. They are shooting themselves in the foot," said Gopinath, 51, who is the vice-chairman of the company to be formed after Kingfisher and Air Deccan merge.
He thinks budget airlines should fill up the seats and stimulate demand instead. "That is a better way to reduce the excess capacity in the market."
"Both low-cost and full-fledged airlines are starting from the same fares, so it is obvious that the passenger will prefer the latter and budget airlines will have more vacant seats and a lower passenger load factor," Gopinath pointed out.
20/06/08 Surajeet Das Gupta/Business Standard

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Categories: Deccan Jun 2008, Low Cost General Jun 2008