A new war over air-fares has begun, barely hours after Spicejet slashed domestic fares by 50 percent, competitors Indigo played catch-up as did Air India. SpiceJet is offering to fly from Bangalore to Mumbai for a measly Rs 1,902 , excluding taxes or from Delhi to Mumbai for Rs 2,830 or from Chennai to Delhi for Rs 3,293 - that's around half the price of a normal ticket. Dramatic discounts on these three routes, and nine others, are part of the airline's three-day super sale. Of course, certain conditions apply, but there's no denying that the offers have stirred up the Indian aviation world. Rival Indigo has dropped prices in a more discreet fashion, while Air India is offering a special scheme that gives a 50 percent discount. Spicejet believes this will help boost load factors and revenues. SL Narayanan, Group CFO, Sun Group said, “There is a certain segment of the population which shops around for value. Even if he gets a 50% price off on the base fare, we believe that we would net a fairly positive contribution. Considering that Feb, March and up to the first fortnight of April people don't travel much, the objective, the rationale of this scheme is to induce some discretionary purchasing. We are seeing significant improvement in load factor because of this.” But while the customer may be king for a while, experts warn that such negative pricing strategies have the industry skating on thin ice once again.
21/01/14 Farah Bookwala/CNBC-TV18/moneycontrol.com
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21/01/14 Farah Bookwala/CNBC-TV18/moneycontrol.com
