Air India kicks off fare war

Air India kicked off a virulent fare war across the domestic network on Monday, cutting economy class fares up to half compared to Saturday’s rates, undercutting both low-cost and full-service carriers.

The move comes a few days after Vistara launched services in India, between three cities to begin with.

Air India’s seven-day sale — January 12 to January 18 — is for travel between January 16 and April 30. The fare cut is across all key routes. At Rs 4,958, the airline’s fares on the Delhi-Bengaluru route, for instance, were the cheapest for January 22, lower than SpiceJet (Rs 5,976) and Jet Airways (Rs 6,872). For the same day, Air India’s fares on the Kolkata-Mumbai route are also cheaper than SpiceJet’s. Tickets on the Mumbai-Bengaluru route cost at Rs 2,881, while IndiGo’s are priced higher by about Rs 300. For January 16- April-end, Air India’s lowest fare of Rs 2,958 on the Delhi-Mumbai route (based on data from makemytrip.com) is less than those offered by low-cost carriers. By contrast, Vistara is offering minimum fares of about Rs 5,500 for February and about Rs 6,500 for most days in January.

IndiGo’s fares stand at Rs 4,500-5,000. Air India’s offer isn’t restricted to a select number of flights; it is for 6-12 flights, at various times of the day. On flights between Mumbai and Ahmedabad, the airline is offering fares of Rs 1,557 on most days, less than half of Vistara’s Rs 3,500. On the Delhi-Ahmedabad route, too, Air India is offering a minimum fare of Rs 2,258, against Vistara’s Rs 4,904. “This is a lean season. So, demand is low,” said an airline source.

Kapil Kaul of the Centre for Asia Pacific Aviation said, “The fourth quarter is always a difficult period. So, a drop in fares by one company is expected. The fall of about 20 per cent in ATF (aviation turbine fuel) prices and further expected fall in these prices have given airlines such as Air India the confidence to be aggressive. I expect other airlines to also launch these kinds of offers till April-end. However, I hope airlines will not fritter away the substantial advantage they have earned due to a fall in fuel prices.”

The response to the sale has been overwhelming “With tickets starting as low as Rs 1,557, the sale has seen a very enthusiastic response. Bookings are up about 100 per cent week-on-week. This sale was followed by a similar offer from Jet Airways,” said Ranjeet Oak, senior vice-president (flights), MakeMyTrip.

What makes Air India’s offer attractive is the airline is offering cheaper fares on routes such as Delhi-Lucknow, Kolkata-Lucknow, Bhubaneshwar-Mumbai, Chennai-Tiruchirappalli and Bhopal-Lucknow.

Other carriers have decided to wait and watch. “We cannot perform hara-kiri. These prices, for instance in the Delhi-Mumbai route, do not even cover the cost of fuel on the route. Such fares have caused the sector to bleed, but Air India has not bothered. We have to wait and see how many seats they offer,” said a senior executive of low-cost carrier.

A Tata-SIA spokesperson said: “We will continue to rationalise fares till we steady our operations. We have just started bookings for a few days.” Vistara, which is positioning itself as a premium airline, cut fares after it started with minimum initial bookings at about Rs 7,000. On Saturday, it offered fares of about Rs 5,500. In many cases, its fares were lower than those offered by its full-service counterparts.