Air India in a tight spot over high fares

In a market where fares play a pivotal role in travel decisions, Air India's high fare structure is reducing its chances, if any, of making a turnaround. With private sector rivals offering cheaper fares, both in the low-fare and full-service segments, Air India with its high cost structure will find itself pushed to a corner unless its business model undergoes a change. A comparison of fares in two sectors makes it evident that private airlines are stealing the show thanks to their low-fare offerings.
For example, an Air India return ticket in the Mumbai-Bhubaneswar sector costs nearly 2.5 times more than the cheapest ticket available in the sector. While Air India charges Rs 16,160 for a return ticket with onward journey on September 4, 2011, and return on September 8, a Kingfisher Red ticket for the same itinerary is priced at Rs 8,479, while low-cost airline IndiGo's fare works out to Rs 6,219. This comparison may be unfair as Air India is a full-service carrier that serves a meal on board and provides services that low-fare airlines do not offer, but the price difference is too high to justify the full service.
In the Mumbai-Delhi sector, Air India's tickets are higher than even its full service rivals. Air India's cheapest one-way ticket for a morning flight on September 4 was priced Rs 4,945 compared to Jet Airways' Rs 3,085, Kingfisher's Rs 3,834 and IndiGo's Rs 3,035.
23/08/11 Lalatendu Mishra/Business Today

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Categories: Air India Aug 2011