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Indian joins price war with 10-35% fare cut(The Economic Times (India) Via Thomson Dialog NewsEdge): Airlines are sweating it out with low fare offerings even as they head into the peak travel season for this summer. Though loads are good, domestic carriers are fighting to capture a higher market share with aggressive fares at the lower end. The latest to join the fray is the national carrier Indian, which has introduced a new category with fares that are 10-35% lower than the earlier lowest fare. Bookings for this category are open for travel between May 1 and June 15. The new category is called the x-ray class. This class offers fares that are lower than the existing lowest category called the India class. For example, the lowest one-way fare on the Mumbai-Delhi route was Rs 3,969. This has been cut by about Rs 1,065 to a new low x-ray class fare of Rs 2,904. Passengers should be warned however, that not all tickets will be sold at this fare. Supply and demand dictate air fares in the country. This means that seats on any flight are sold at a number of fare levels. If a flight is filling up fast, the yield management system ensures that the supply of low-priced seats (like the x-ray class) fares is closed. Fares on the much-in-demand Mumbai-Goa route have been cut to Rs 1,704 compared to the previous low of Rs 2,209. On the Mumbai-Bangalore route, the new low is Rs 2,404 compared to Rs 3,969 previously. "The low fares are used by airlines to stimulate demand and grab marketshare," says a Mumbai-based travel agent. Jet Airways had a similar promotion fare scheme for travel in February. Fares on both Indian and Jet Airways have been coming down under pressure from the aggressive pricing of low-cost carriers as well as the launch of Kingfisher Airlines a year ago. The fares have continued to be low despite an almost 30% increase in aviation fuel prices in the period. The passenger tax component on domestic tickets has been hiked marginally from Rs 221 to Rs 224 with the increase in the service tax component. The hike has so far been implemented only by Indian, but other airlines are expected to follow suit. |