Air India to slash fares by up to 23%

New Delhi: Air India will reduce fares on 48 domestic routes by 3-23% effective September 1. “This is a purely commercial decision, which aims at increasing the airline’s market share,” a senior ministry official told ET.
The cut in fares, the first since December 2008, will come in the backdrop of the carrier registering a Rs 300 crore revenue increase from ticket sales during April-July over the year-ago period.
National Aviation Company of India (Nacil), the company that owns Air India, is the third largest player in the country with a 17.3% share of passenger traffic. Jet Airways, with a 26% share is the leader in the domestic market, followed by Kingfisher with 20%. Other airlines critcised Air India’s move and said they will be forced to follow suit and cut fares as well.
“It is a very ill-timed move and unfortunate. We will be forced to undertake such measures too and those who don’t will suffer. It is unnecessary and will change the dynamics of the industry,” said an executive working with a competitor.
According to sector experts, September is a lean month for the airline industry and with India being a price sensitive market, lower fares can result in higher traffic and garner more market shares. But if, as anticipated, other airlines cut prices it will nullify advantage.
27/08/10 Anindya Upadhyay/Economic Times

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Categories: Air India Domestic Aug 2010, NACIL Aug 2010