Air India, IndiGo, GoAir join latest war over airfares

It's bonanza time for air travellers, with Air India, IndiGo and GoAir on Thursday joining the latest war over airfares, launched by SpiceJet which had earned the wrath of DGCA for offering one rupee air fares two days ago.

PTI| Updated: Apr 03, 2014, 21:33 PM IST

New Delhi: It's bonanza time for air travellers, with Air India, IndiGo and GoAir on Thursday joining the latest war over airfares, launched by SpiceJet which had earned the wrath of DGCA for offering one rupee air fares two days ago.

Air India launched a short-term 'Monsoon Bonanza' scheme under which tickets on 40 select domestic sectors can be bought till Saturday for travel till September 30.

A spokesperson for the national carrier said the scheme covers 108 flights, including select domestic legs of international flights. The tickets under the scheme are priced at a flat rate of Rs 1,499 plus applicable taxes.

No-frill carrier IndiGo also announced discounted ticket prices on several sectors, provided they are booked at least 90 days before the travel date.

The discounted fares start at Rs 1,389 for a one-way ticket, the airline said in a letter to travel agents, adding these fares were available only on direct flights on IndiGo's network.

While the airline was silent about by when a passenger has to book a ticket to get these low fares, it said only a limited number of seats were being offered under the scheme and travel has to be between July one and September 30.

Travel agents, requesting anonymity, said Rs 1,389 price was the lowest on IndiGo's network and valid for a one-way travel between Delhi and Lucknow. A Delhi-Mumbai ticket can be bought for a little over Rs 2,400.

The actual fare would be more as a flyer would also have to pay for passenger service fee, User Development Fee and other taxes, they said.

GoAir also started a 48-hour sale till tomorrow, offering 30-40 percent discount, for 90-day advance booking valid for travel between July and September, they said.

This is the fourth time this year that a fare war has been initiated, particularly by the no-frill carriers.

SpiceJet's rupee one offer had attracted a mad rush of passengers with its website crashing on Tuesday. Within hours, aviation regulator DGCA came down heavily on it, terming the offer as "predatory" and a "malpractice" and asking it to stop it immediately.

While asking SpiceJet to withdraw its one rupee scheme on Tuesday, the DGCA had said such pricing was "not only predatory", but amounted to "malpractice" under Rule 135 of the Aircraft Rules relating to air tariff.

The fact that only one or two seats were being offered on each flight at the rate of one rupee amounted to "deceiving the travelling public", officials had said, adding that the airline was making such an offer for 91 domestic sectors.

SpiceJet on Thursday came out with a clarification saying its fares were inclusive of fuel surcharge. "So on the Rupee one sale fare that was on offer, using the example of Delhi- Mumbai, the total fare came to Rs 864, all-in after adding Rs 863 in taxes and fees."

"This fare offer, along with the Rs 799 fare inclusive of fuel surcharge but excluding taxes and fees, was removed as per the DGCA directive.

"The lowest sale fare still available as part of the sale is Rs 1499, inclusive of fuel surcharge, but excluding taxes and fees. Adding taxes and fees of Rs 937, this fare comes to Rs 2436, all-in," the SpiceJet statement said.

Commenting on the development, Sharat Dhall, President of travel portal Yatra.Com said, "With India being a price elastic market for air passengers, these discounts are being used by airlines to create a market for themselves."

"The advance discount fares continue to stimulate the market and offer lucrative opportunities for those who are willing to book early. We have noticed our sales jump by five times since SpiceJet announced its sale and expect the momentum to continue," Dhall said.

Neelu Singh, Chief Operating Officer of Ezeego1.Com, felt the trend of discounted fares was a "good strategy" to fill up seats that would otherwise go empty.

"These sales encourage advance travel planning as people have realised that booking early brings down their overall travel costs significantly, as much as by 20 percent," she said, adding, "We are encouraging our customers to book early and make the most of these limited period offers."

Indian carriers have been reeling under losses and trying hard to strike a balance between traffic volumes and margins.

High fuel costs, airport charges and huge loans and interest burden are forcing them to fill up at least 80-85 percent of the flights at low fares, industry sources said, adding it was "a crime" to let seats go empty.