Jet-Sahara deal may temper fare war

Rival airlines expect Jet Airways to restore some "sanity" in the pricing of tickets after the acquisition of Air Sahara.

An Air Deccan executive said Air Sahara was offering tickets at throwaway prices which might stop after the merger. Siddhanta Sharma, managing director and CEO of SpiceJet, said Air Sahara was operating in both the full fare and low fare space. "Some sense might come back in the pricing of tickets as one player has exited," he said.

Air Sahara had kicked off a price war six months back, offering 25-30 per cent lower fares than even budget carriers on key routes under its "Steal-a-Seat" offer. It had also launched a "never-before-offer" whereby a passenger can travel any number of times at Rs 699.

Under another scheme, the airline was offering a limited number of tickets, with the cheapest one coming at 91 per cent discount provided passengers plan their travel 30 days or more in advance.

Sharma also felt that the consolidation would lead to rationalisation of routes by both the airlines. For instance, Jet Airways operates 11 flights a day on the Mumbai-Delhi route while Air Sahara operates 7 flights a day.

"Post-merger, Jet Airways could rationalise these operations and redeploy this capacity in other routes. Jet will also get Sahara's staff apart from other infrastructure facilities," Sharma said.

Most of the rivals were, however, dismissive of the new combine. "Air Sahara, which was bleeding during the last six months due to the low-fare war, will only pull Jet Airways down further," said a full service airline executive, on condition of anonymity.

Air Sahara has scaled down its operations in the last six months and therefore, Jet will have to spend more to turn it around.

Others felt Jet may face problems in keeping the Air Sahara staff on board. Air Sahara pilots are drawing much less than their counterparts in Jet. Post merger, a senior commandant of Air Sahara would be forced to draw a salary which is the same as a junior most first officer of Jet Airways. "If Jet Airways want to match the salary, then costs will zoom," industry sources said.

Hitesh Patel, executive vice-president, Kingfisher Airlines, said the merger will not affect his airline anyway.

An aviation analyst had this piece of advice for Jet: run Air Sahara as a low cost airline. "It may be tough. But that is the challenge they should take up," he said.