The domestic aviation sector could be seeing the start of yet another fare war, with airlines beginning to offer sharp discounts ranging as high as 58 per cent on tickets booked even a day prior to the departure date.
While the August-October period marks the lean season between the summer and winter schedules, the sharp discounts being offered currently by carriers on tickets bought close to the travel date marks a departure from the traditional practice of airlines offering cheap tickets for bookings done a month and three weeks before the departure date, apart from the strategy of offering promotional fares.
Industry analysts feel that the drop in fares are an attempt by airlines to fill up empty seats at a time when the recovery in the economy is still sluggish and the fact that passengers loads during the last few weeks have been sharply low. A source in a private airline said that Jet Airways and Air India have started off this current fare war and low-cost carriers were being forced to match the sharp cuts in fares.
“Why only this quarter? The fourth quarter of every fiscal is also a traditionally lean quarter but we never saw fares coming down to this level during January-March period this year. We did see airlines announcing offer sale of tickets but that was for a limited period,” the airline official said on condition of anonymity.
“This is a real bloodbath, as it is insane to offer fares at this level a day before the departure date. The airlines are forced into it because the passenger loads are as low as it used to be a couple of years ago. The reason for lower loads is surely the weak economy,” said Keyur Joshi, co-founder and COO at MakeMyTrip.com.
The low fares also spell bad news for the industry, which will find it difficult to even recover money in the domestic routes with the current levels of low fares. “To break even in the Delhi-Mumbai route, an airline needs to sell its tickets at an average price of between Rs 5,500 and Rs 6,000. The price of last minute tickets in the sector should be in the range of Rs 9,000 to achieve the average fare mark. With these (latest set of) fares, we are only going to make more losses,” said the airline official quoted above.
Travel agents concur that the onset of the lean season