Tuesday, December 20, 2016

Price war flares in Indian aviation sector despite rise in oil prices

Air travelers globally are bracing for higher fares after OPEC decided last month to cut output. Not in India, the world's fastest-growing major aviation market.

Carriers cut fares in November, selling tickets about 12 per cent cheaper on average for Mumbai-New Delhi flights from a year ago, according to Yatra.com, India’s No. 2 online travel agency. The steepest discounts were as much as 30 per cent for the world's seventh-busiest local route.

The slashing of fares during the peak holiday travel season threatens to wipe out gains accrued from cheap oil and push some of the operators back to losses. Carriers in China and India are expanding capacity with orders for hundreds of planes and luring passengers with discounts. Excess capacity combined with tickets offering base fares as low as 2 cents to first-time fliers have constrained the ability of Indian carriers to translate an increase in passenger traffic to profits.
20/12/16 Anurag Kotoky/Bloomberg/Economic Times

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