New Delhi: The flash sale on domestic tickets announced by Air India earlier this week may have received tremendous response from flyers and stimulated air travel during a typically lean season, but mindless pricing without sound economics to back it up is most likely to pull the industry deeper into the red.
While airlines' accumulated losses are already at about Rs 50,000 crore - with half of that coming from Air India, rivals like Jet Airways, IndiGo and even Go Air have joined the fray in order to secure a sizable chunk of the passenger pie. Of the three, IndiGo runs a profitable ship, but deep discounting will clearly be a challenge for others like Jet, which posted record losses of over Rs 4,000 crore in 2013-14.
While Air India's fare cut by up to 50% on some routes (such deep discounts are especially surprising for a full-service carrier) is largely seen as a reaction to the entry of another full-service carrier Tata-SIA's Vistara in to the market, there is clearly more to the story. At this point, Vistara only has two aircraft and poses minimal competition because it is flying just a couple of destinations from its New Delhi base - Mumbai and Ahmedabad.
17/01/15 Roudra Bhattacharya/Business Standard
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While airlines' accumulated losses are already at about Rs 50,000 crore - with half of that coming from Air India, rivals like Jet Airways, IndiGo and even Go Air have joined the fray in order to secure a sizable chunk of the passenger pie. Of the three, IndiGo runs a profitable ship, but deep discounting will clearly be a challenge for others like Jet, which posted record losses of over Rs 4,000 crore in 2013-14.
While Air India's fare cut by up to 50% on some routes (such deep discounts are especially surprising for a full-service carrier) is largely seen as a reaction to the entry of another full-service carrier Tata-SIA's Vistara in to the market, there is clearly more to the story. At this point, Vistara only has two aircraft and poses minimal competition because it is flying just a couple of destinations from its New Delhi base - Mumbai and Ahmedabad.
17/01/15 Roudra Bhattacharya/Business Standard
