Air travellers between Delhi and Mumbai have reason to rejoice. Low-cost carriers GoAir, IndiGo, SpiceJet and JetLite have gone back to zero and Re 1 air fares on India's busiest sector.
On offer from the beginning of this week, these fares are expected to continue through the rest of the lean season, that is, till the end of September. Customers buying any low-cost carrier ticket on the Mumbai-Delhi route will only have to pay taxes and surcharges that range from Rs 3,400 to Rs 3,600.
Statistics showed that this is the steepest drop in basic fares, from Rs 2,000 in July, in any Indian sector in the last six months.
"There is a short-term special off-peak promo going on for Delhi to Mumbai and Mumbai to Delhi only. These sectors have had very light loads during the last few weeks. It is good news for passengers," said Bruce Ashby, CEO of Delhi-based low-cost carrier IndiGo.
Full-service carriers are not too far behind. All full-service carriers including Air India, Jet Airways and Kingfisher are offering basic fares ranging from Rs 100 to Rs 500.
Airline executives said the decision was a result of circumstances that turned the most lucrative sector in the country into one of the most unprofitable for low-cost carriers.
July was one of the leanest months for airlines in general with passenger loads dropping 10 to 15 percentage points to around 55 per cent.
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"However, average loads for low-cost carriers in the Mumbai-Delhi sector dropped even further to around 40 per cent," said Samyukth Sridharan, chief commercial officer, SpiceJet.
This was because low-cost carriers were offering fares of Rs 5,000 (basic fare of around Rs 2,000), almost the same as full-service carriers.
"On the Delhi-Mumbai route, full-service carriers are usually immune to the price-sensitive market because most of their travellers are corporate. So, while the higher fares did not affect the loads of the full-service carriers, low-cost carriers took a major hit," said an industry expert.
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Pruning capacity in the route was also out of the question. "Out of 54 daily flights between Delhi and Mumbai around 35 are operated by full-service carriers, which means low-cost carriers do not have much capacity anyway, so cutting back was out of the question," said Sridharan.
Carriers tried to ride out the crisis by opting for ad hoc cancellations to fill their flights. July saw the maximum number of ad hoc cancellations of flights, almost 70 per cent of which were by low-cost carriers.
But these cancellations were short-term measures, so slashing fares was the only option that remained.
"It also helped that GoAir started the zero-rupee fares very early in July. When the airlines saw that all the passengers were filling up GoAir flights, they had to follow suit," said a travel portal executive.
GoAir had a load of 76.9 per cent, the highest in the industry during July.